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Commercial property showing first signs of recovery

New figures have revealed that the commercial property market is starting to see the first signs of recovery.

The latest CB Richard Ellis (CBRE) Monthly Index shows that total returns on commercial property more or less stabilised in June, down only 0.1 per cent, following several months of gradual improvement.

Although rental values remain under downward pressure across most market sectors, income returns – now at an annualised rate of close to 9 per cent – have helped to offset the fall in capital values.

In some areas of the market yields have hardened, seeing values rise for the first time since mid 2007.

CBRE head of economics and forecasting David Wylie said: “The stabilisation in total returns suggests that the long and sizable outward yield shift since the market peak has finally run its course.

“The firmness of yields across the market suggests investors may now be looking through the current weakness and seeing value in today’s pricing.”

The CB Richard Ellis Monthly Index also revealed property values are now 44 per cent below their peak in mid-2007

Rental values for all types of commercial property fell by 0.9 per cent in June, less than May’s 1.1 per cent fall.