According to the latest Jones Lang LaSalle Quarterly Commercial UK Property Index, All-Property total returns were -4.9% by the end of Q1 2008.

However, given the significant price correction witnessed in the UK market, the rate of the decrease in returns has slowed compared to the previous quarter. In Q1 2008, capital values fell (-6.3% compared to -9.8% in Q4 2007). This results in an annual return in commercial capital values (twelve months to March 2008) of -16.6%.

All three commercial sectors recorded negative total returns in the first quarter, with the office segment recording the lowest at -5.3%. The correction has been particularly marked in the Greater London and regional markets. Both markets have recorded 0.5% increase in yields over Q1 2008 to 6.25% and 6% respectively. The retail and the industrial sectors recorded total returns of -4.9% and -4.5% respectively in Q1 2008, compared to -9.2% and -7.9% in Q4 2007.

Despite the fall in returns all property fared better than equities, which recorded returns of -9.9% over the first quarter of 2008, following the turmoil that has hit the global financial markets.

Jeremy Handley, a director in valuation advisory at Jones Lang LaSalle, said: “We have already witnessed and continue to record a significant correction in pricing across all three major sectors and across growth and value properties. There is a chance that values may fall still further, given the turmoil in global credit markets. It will take a return to a new level of normality within these markets before the pricing of property relative to other asset classes can be accurately assessed.”