For the first time in over four years, capital values fell across all segments except Central London Offices in July, in response to weaker investor sentiment and more difficult market conditions. Offices were the only sector to see any capital appreciation over the month, but at 0.4% this was the weakest monthly All Office capital growth since January 2005. Monthly retail and industrial total returns were both 0.2% respectively against 0.7% for All Offices. With rental growth slowing to 0.3% during July, the All Property total return was just 0.4% over the month, and 13.2% y-o-y.



Gilts were the best performing asset class in July with a monthly return of 2.3%, as the fallout from the US sub-prime mortgage crisis caused equities to record a negative return of 3.3%. As investors' risk aversion increased following equity market turbulence, the benchmark UK gilt yield hardened 20 bp to 5.25% during July.

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