The commercial property market appears to have stabilised

The return in May was 0.7%, the same as in April, according to the latest Investment Property Databank monthly index. Property outperformed bonds at -1.1%, but lagged behind equities which reached 2.8%.

Rental value growth increased slightly from 0.2% in April to 0.3% in May and the impact of yield movements fell further to 0.05%.

IPD research director Malcolm Frodsham said: ‘A healthy rate of rental value growth is providing investors in commercial property with a total return approaching 10% a year, and for investors in offices total returns are running at nearly 15% a year.’

The leading sector was still offices with a return of 1.1%, while industrial and retail gave returns of 0.7% and 0.4% respectively.

The IPD Monthly Index reflects the performance of 4,259 properties valued at £57bn.

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