UK commercial property total returns were 4.9% in Q2 2006, while all-property returns over the past year now stand at 21.3%, the highest level recorded so far on the 5.5 year IPD Quarterly Index.

For the third quarter in succession, offices delivered the highest total returns, at 6.1% ahead of industrials at 4.7% and retails, unchanged on Q1 2006 at 4.3%. The anticipated recovery in office rental values is now beginning to emerge. Rental value growth almost doubled in Q2 2006 to 1.5%, up from 0.8% in the preceding quarter. The rate of retail rental value growth slowed slightly, from 0.8% to 0.7%, while industrial rental growth remained lower, at 0.4%.

Ian Cullen of IPD said “We expect given its frequency and depth of market coverage, that the Quarterly Index will quickly become the industry standard information base for the newly emerging property derivatives market. However, we shall continue to support and publish the Annual Index for so long as it is found valuable by the investment industry for derivatives or other purposes”