U.K. commercial real estate values rose for the eighth straight month in December as investor confidence in property grew, Investment Property Databank Ltd. said.
The average value of stores, offices and industrial properties climbed 1.5 percent from a month earlier, the most since March 2010, London-based IPD said in a statement today. Total return, which combines changes in real estate values and rental income, was 2.1 percent.
U.K. inflation unexpectedly slowed in December, which may prompt Bank of England Governor Mark Carney to keep interest rates at a record low for longer to help the economic recovery gain pace. The growing economy is likely to boost demand for stores, warehouses and office buildings, making it easier for landlords to raise rents.
“Sentiment has improved drastically along with economic performance,” Phil Tily, a managing director at IPD, said in the statement. “2013 was the year when we saw a marked turnaround in the performance of U.K. commercial real estate. Critically, this has increased confidence in higher yielding and heavily discounted regional assets.”
Office buildings led the increases with a 2.5 percent gain, while warehouses rose 1.7 percent and stores climbed by 0.9 percent. Total return last year was 10.9 percent, the most since 2010, IPD said.
Income producing commercial property values began to rally in May after 17 straight months of losses through March and no growth in April.
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