All-property returns in October were the second lowest ever, according to the latest Investment Property Databank Monthly Index.

The only time returns have fallen below the -1.5 posted last month was May 1990, when the index showed returns of -1.8%. The figures represent a drop of 30 basis points from September.

October saw an income return of 0.4%, but this was wiped out by a fall in capital values of 1.9%. Rental growth remained positive in October, at 0.2%, but this was down from 0.4% in October.

Rising yields

The negative total return was mainly caused by a rise in yields, which caused a -2% month on month yield impact on capital value growth.

By sector, offices showed total returns of -1.4%, industrial showed returns of -1.4% and retail -1.6%.

‘We can, however, still see a difference between the weak 0.1% month on month increase in rental value growth in the industrial and retail sectors and the stronger 0.5% month on month rental value growth in the office sector,IPD said.