CBRE Monthly Index Central London property continues to outperform wider UK market
London, 7 October 2011 – UK commercial property values grew marginally in September, with total returns for All Property increasing to 0.6% compared to 0.5% in August 2011. Despite being only a slight improvement in capital growth, there was a definite ease away from the very slight negative capital growth seen last month, with growth of 0.1% in values. On the whole, most commercial property asset types kept their head above water in September, with Central London and Midtown offices continuing to outperform, with total returns of 1.0% and 1.8% respectively. The outer London / M25 office market took a slight turn downwards in September, with a return of -0.2% signaling the end of two years of positive returns.
Nick Parker, Senior Analyst at CBRE, said: “The enduring strength of core London markets remains a feature of today’s results, as it has over the last two years, with competition from investors for a limited stock of good quality assets still driving prices up. There is a distinct divergence between property types, with good quality asset values growing, offsetting falls in lower grade property.”
September UK Monthly Index snapshot:
• Capital values at the All Property level grew by 0.1% this month, with total returns of 0.6%.
• Office returns were 0.6% in September, with capital growth of 0.1%
• Central London office total returns improved to 1.0%, as capital values grew by 0.5%.
• Outer London / M25 offices saw returns fall this month, at -0.2%, their first negative monthly return since mid 2009.
• Rest of UK offices saw no capital growth, with returns of 0.5%.
• Industrials were the strongest sector with returns of 0.7%, and capital growth of 0.2%.
• High Street shops saw a marginal improvement, as values flattened and returns were 0.5%.
• Retail warehouses and shopping centres both saw capital growth of 0.1% and total returns of 0.6% in September.
• Rental values slipped back in September, falling by 0.1%. This leaves them marginally down over the year to date.
• All Property equivalent yields remained unchanged for a fifth consecutive month at 6.6%.