The IPD/Acuitus Retail Property Auction Index recorded a 2.8% increase in values in Q1, the second consecutive quarterly growth.
The first quarter of this year saw values increase by 7.8% year on year, with the index reaching 96.1 – the highest it has been since 2010.
The results suggest that the bottom of the cycle for this type of property was reached in Q3 last year when the index registered the 14th consecutive quarterly drop in values and bottomed out at 84.4.
Over the course of the quarter, the capital value of IPD’s standard retail shops increased by 1.2%. The results are indicative of the strengthening UK economy and increased investor confidence as the UK commercial property market recovery continues.
Confidence has seeped backed into the real estate market. With an increased demand for assets that have a certain level of flexibility through
redevelopment and repositioning, the auction room provides private investors the ability to dig to find the best opportunities.
Richard Auterac of Acuitus comments: “With the retail property auction index now showing two quarters of growth this would indicate that the bottom of the price cycle was reached in Q3 2013. At the peak of the property cycle, the index reached 132.1 in Q4 2007.
“The index’s annual growth rate has accelerated from 6.3% (Q4 2012-Q4 2013) to 7.8% (Q1 2013-Q1 2014), which is a positive sign for a sector badly battered since the start of the recession in 2008.
“Returning confidence among a number of successful retailers, increased consumer demand and a decline in the rate of ‘bad news’ about the high street has finally persuaded investors that the sector has now seen the worst, and better prospects lie ahead.”
The RPAI report for Q1 2014 can be downloaded in the Market Intelligence section here
