In Q2 2015, the latest MSCI/Acuitus UK Retail Property Auction Index (RPAI) decreased to 94.7 representing a negative change of 3.6% year-on-year
In contrast, the IPD UK Monthly Shops Index stood at 5.3% higher than a year ago.
The RPAI measures the capital value change of retail properties sold in the UK at auction. The sample is a subset of the EIG database, including only the major commercial auction houses.
MSCI comments: “The UK property market strengthened further in the three months to the end of June 2015, with capital values rising by 2.3% according to the IPD UK Monthly Property Index.
“Investor total returns increased to 3.6% during the months of April, May and June 2015, from 3.0% recorded in between January and March as stronger rental value growth and yield compression boosted performance.
“The UK retail sector has been in firm recovery mode since August 2013 with capital values recording continuous growth over this period. Between April and June 2015, retail capital values grew by a further 0.7% while rents grew by 0.2%.
“Investor total returns, at 2.2% for the three months ending in June 2015, continued to be driven by growing investor sentiment with demand compressing yields, as reflected by the positive yield impact of 0.9%.”
Reacting to the latest RPAI level, Acuitus’s Richard Auterac said: “The RPAI showed an unexpectedly large drop of -3.6% which was against the flow of improvement in the economy and consumer confidence.
“The drop was due to a greater proportion of shops let to independent traders being sold in the auction room.
“These are investments where rents have been newly-rebased at lower levels following the recession, but yields have remained stubbornly high due to the continuing negative press the High Street receives and do not yet reflect the potential of future rental growth.”
The Q2 2015 index report can be viewed here
