All-property capital growth accelerates as the end of the year approaches

Capital values increased 2.0% across all UK Commercial property in November 2021, according to the latest CBRE Monthly Index. In November, rental values rose 0.4% and total returns were 2.5%.

In November, Retail sector capital values rose 0.9%. High Street Shops reported a solid month with 0.7% growth. Retail Warehouses posted its fifth consecutive month of growth in excess of 1.5% with 1.6% growth over November. After the marginal increase in Shopping Centre values over October, the sector has returned to negative capital growth, with values decreasing -0.4% in November. Retail rental values were flat over the month, but High Street shops recorded the strongest rental growth over the month at 0.4%. Retail total returns were 1.5%.

The Office sector saw capital value growth of 2.9% over November. This figure was inflated by a limited number of Central London assets which reported very strong growth over the month. Without these strongly performing assets the monthly capital growth for the sector would have been closer to the average growth over the last three-months (0.4%), although still trending stronger. Office sector rental growth was 0.1% while total returns for November were 3.3%.

In November, the Industrial sector reported capital growth of 2.9%, not far off the record monthly growth for the sector recorded in September this year (3.1%). Industrials in the South East posted slightly stronger capital growth than those in the Rest of the UK, with increases of 3.0% and 2.9% respectively. All Industrial rental value growth was 1.0%, the greatest monthly increase for the sector in the history of the index. Industrials in the South East reported a 1.1% rise in rental values, compared to 0.8% in the Rest of the UK. Industrial total returns for the month were 3.3%.

Despite the distortion caused in parts of the index by significant value movements for some very large Central London Office assets, it is clear that November was another strong month for UK property values. The usual suspects, Retail Warehouse and Industrial continue to report large monthly increases in values but other sectors also seem to be picking up a head of steam. High Street Shops and Outer London and M25 Offices both achieved capital growth in November greater than the Q3 average.
Toby Radcliffe, Research Analyst, CBRE