IPD has released its results for Japanese real estate to the end of the third quarter of 2008, which are showing negative year-on-year capital returns for the first time.

The IPD Japan Monthly Indicator has been tracking the decline in the rate of capital appreciation since July 2007, and the capital return index has been falling since May 2008, but this is the first month to record a negative capital return, at -0.1%, on an annual basis.

It is Japan's office sector remains the best performing sector, with a total return of 10.8% for the 12-months to May 2008, but this saw a decrease of 100 basis points compared to one month earlier.

Retail property this month replaced residential as the worst performing sector.

Toshiro Nishioka, MD at IPD Japan, said: 'The retail sector shows continuously weak performance. Capital returns on the all retail level have turned negative, leaving the annual total return to May 2008 to drop to 4.7%, a record low in the sector history.

'This means that for the first time in the current cycle, the year-on-year return on retail property is lower than the return on residential property.'