Capital growth at the All Property level reported for the third consecutive month. Smallest monthly decline in Retail values in over three years.

Capital values increased 0.5% across all UK Commercial property in April 2021, according to the latest CBRE Monthly Index. This is the third consecutive month to report positive capital value growth at the All Property level. In April, rental values rose 0.1% and total returns for the month were 1.0%.

The Retail sector reported a -0.1% fall in capital values in April. This represents the smallest monthly fall in values for the sector since February 2018. Standard Shops in the South East saw capital values increase 0.2%, driven mostly by rising values for supermarkets. Meanwhile, Retail Warehouses reported capital growth of 0.6% for the second consecutive month. While Shopping Centres continued to post declining capital values, the decrease of -1.8% in April was the smallest in nine months. In April, Retail rental values declined -0.2%. Retail Warehouses was the only sector to report rising rental values at 0.1%. Retail total returns were 0.6%, the first positive monthly returns for the sector since August 2018.

The Office sector posted capital value growth of -0.1% over April, the same as March. In contrast, Central London offices reported positive capital value growth of 0.1%. Office sector rental value growth was flat at 0.0% over the month. Outer London and M25 Offices was the only subsector to report rental value growth at 0.1%. Office sector total returns were 0.3% in April.

In April, capital value growth continued for the Industrial sector, albeit at a reduced rate of 1.8%, down from 2.6% in March. This growth rate was evenly represented in the South East and in the Rest of UK, both at 1.8%. Industrial rental values displayed a similar trend of continued growth but at a lower rate than March, increasing 0.5%. This was driven by higher growth in the South East at 0.6%, compared to 0.4% in the rest of the UK. Industrial total returns for the month were 2.2%.

April reported positive capital value growth at the All Property level for the third consecutive month. However, unlike previous months the figure was not pulled down by Retail performance. In fact, Offices and Retail reported the same decline in capital values in April, the first time the two sectors have posted the same capital growth since November 2017. This reflects a potential convergence in the performance of the two sectors as some Retail sectors saw declines in value level out and even start to rise again while Office sector values remained flat. Meanwhile, Industrials continue to perform strongly across the country.
Toby Radcliffe, Research Analyst, CBRE