UK commercial property capital values increased 0.6% overall in June 2017 according to the latest CBRE Monthly Index. A quarter-end surge from the Industrial sector helped boost the national average. Rental values increased by 0.2% across All UK Property over the month.

Over H1 2017, capital value growth reached 2.5%, up some way from H1 2016’s 0.6% but still shy of the 4.1% recorded in H1 2015. Rental value growth was 0.8% for H1, lower than the 1.1% in the same period in 2016. Propped up by steady income returns, total returns hit 5.3% for the first half of 2017.

The Industrial sector returned to previous form, with capital values rising 1.5% in June 2017, up from 0.5% in May. Capital growth was driven by Industrials in the South East, which reported a 1.8% increase for the month. Industrials in the Rest of UK posted a respectable increase of 0.9%. Industrial rental values rose 0.5% over the month. In H1 2017, capital values in the Industrial sector rose 5.8%, while rental values increased 2.6%. Total returns were 8.8% for UK industrial as a whole, and 9.9% for South East industrial.

Retail capital values increased 0.1% overall in June, with high street shop capital value growth of 0.2% for the month. Rental values also increased slightly, with the sector reporting growth of 0.1%. In H1 2017 capital values in the Retail sector increased 0.9% overall, with high street shops in the South East reporting an increase of 1.3% over H1. Rental values increased by 0.3% over the same period.

The Office sector recorded capital value growth of 0.4% over the month of June, boosted by performance outside of Central London. Outer London/M25 Offices reported capital growth of 0.5%, while Rest of UK Offices recorded growth of 0.6%. While rental values at the all UK office level were flat in June, this disguised a divergence in performance between Central London, where rental values fell -0.3%, and markets outside the capital, where rental values rose. Capital values in the Office sector as a whole increased by 2.3% in H1 2017. Rental values increased 0.4% across the sector in H1.

Miles Gibson, Head of UK Research at CBRE
June’s results mark the end of H1 2017 and 12 months since the EU referendum. Despite City office rental values falling for a third consecutive month, overall results paint the picture of steady property performance. Industrials in particular continue to perform well and provide a boost to overall performance
Miles Gibson, Head of UK Research at CBRE