Q2 U.S. comm. property values make first gain since slump-IPD

* Average prices rose 2.2 pct in quarter to end-June

* Economic uncertainty threatens future growth

LONDON/NEW YORK, Aug 23 (BestGrowthStock) – U.S. commercial real
estate prices posted their first quarterly gain in more than two
years last quarter, data showed on Monday, although deepening
economic gloom may cut post-slump celebrations short.

After shedding about a third of their value between the
first quarters of 2008 and 2010, average U.S. commercial
property prices rose by 2.2 percent in the three months to
end-June, as measured by the Investment Property Databank US
Quarterly Property Index.

The milestone data ends a phase of writedowns that wiped out
five years of property value appreciation before the credit
crisis hit, but the London-based index compiler said a “mixed”
economic outlook could arrest further price growth.

“The return to capital appreciation could be a brief one,
with the economic picture worsening again,” Simon Fairchild,
Managing Director at IPD North America, said.

“If this does prove to be a brief respite before further
unwinding, investors will need to be prepared for setbacks with
increased volatility in the performance of their investments.”

The IPD US Quarterly Property Index tracks $77.3bn worth of
properties in predominantly core open-ended funds.

The average income return of these funds edged up 10 basis
points to 1.8 percent in the three months to June 30, generating
a total return of 4 percent over the quarter and taking the
12-month return to -0.1 percent.

IPD said some of the funds monitored had started to attract
substantial inflows of new money although the overall aggregated
position pointed to sustained redemptions, reflecting shaky
sentiment among U.S. property investors.

Net outflows fell by 37.5 percent quarter-on-quarter to $347
million in the three months to June, notwithstanding the uptick
in transaction activity, IPD said.

“At this stage in the cycle we would expect to see investors
coming back in to buy assets at the re-priced levels but the
overall net disinvestment reveals an inconsistent pattern of
fund activity,” Fairchild said.

“At the prime end, the environment is operating as a
sellers’ market with prime stock-owners demanding premiums to
consider transactions. All of this confirms that the pick up in
the market is far from uniform,” he added.
(Reporting by Sinead Cruise in London and Ilaina Jonas in New
York; Editing by Andrew Macdonald)
(See www.reutersrealestate.com for the global service for real
estate professionals from Reuters)

Q2 U.S. comm. property values make first gain since slump-IPD