April drop extends UK comm property fall to 17 pct

LONDON, May 15 (Reuters) - British commercial property values slid by 1 percent in April, extending the market's slide from last summer's bull market peak to almost 17 percent, data from Investment Property Databank (IPD) showed on Thursday.

The rate of decline in capital values continued to slow after a nine-month run of falls but provided little comfort for real estate investors because rental growth had begun to feel the heat as the economy slowed, according to IPD.

"For those investors who thought we had reached the bottom in the first quarter of 2008, these numbers will be unsettling at best," Malcolm Frodsham, IPD's research director, said. "Flat rents over the month raise the spectre of a double-dip."

IPD's benchmark monthly data is used as the basis for property derivatives trading and was based on a sample portfolio of 3,918 properties with a total value of 45.7 billion pounds ($88.89 billion).

The report showed the average initial yield on UK commercial property rose to 5.48 percent in April from a low of 4.57 percent last summer.

Property yields measure rental income in relation to capital values and enable comparisons with markets, such as 10-year UK government bonds which yield around 4.83 percent.

Total returns, which combine rental income and capital growth, fell last year for the first time since 1992 -- a loss of 3.4 percent after gains of 18-19 percent in each of the previous three years, according to IPD's bigger annual UK all-property index.

Property services firm CB Richard Ellis (CBG.N), one of IPD's biggest data contributors, said this week UK commercial property values fell by 0.7 percent in April. (Reporting by William Kemble-Diaz; editing by David Hulmes)

(See www.reutersrealestate.com for the global service for real estate professionals from Reuters).