Strong November means capital growth has increased by 5.4% since August

UK commercial property values rose by the largest monthly figures in 15 years, according to November’s IPD UK Monthly Index.

The monthly index, released on the 10th working day of each month, analyses total return, income return and capital growth for retail, office and industrial sectors.

Capital growth measured 2.4% last month, showing a steady rise of growth measuring 5.4% in total since the market began ascending in August. Capital values have still fallen 8.4% in the last twelve months, however.

The rise is largely attributed to slowing declines in rents, with rents falling by 0.3% in November – its shallowest decline since October 2008.

In retail, November saw a 2.8% growth – the second largest in IPD history.

The industrial sector’s 2.1% growth was the largest seen since March 1994, while in the historically more volatile office sector, last month’s 1.8% capital growth was the largest gain since December 2006.

Meanwhile building and property consultants Tuffin Ferraby Tayloor LLP noted a 150% increase in commercial property investment activity in October and November. The firm said it had seen around 25 transaction due diligence survey instructions, compared with just 10 per month for the rest of 2009.

Malcolm Hunt, head of UK Client Services at IPD, said: “The recovery in UK commercial property markets over the last four months has gathered enough momentum to make a positive annual return for 2009 achievable."

"This time last year, the Monthly Index showed we were on the brink of surpassing the worst annual return since 1990 – at that time such a rapid reversal of fortunes would have been considered far fetched.”