UK commercial property total returns were 0.2% in September, the third consecutive month recorded at this this level. As a result, total returns for the year to date have been 1.1%. Capital values dipped 0.3%, representing a fall of 3.2% in All Property capital values so far this year, according to CBRE’s Monthly Index.

Central London offices continued to perform well with total returns of 0.5% in September, leading to 4.9% total returns year to date, and 1.7% in the third quarter. With strong investor interest in prime property and prime locations and prices being driven by international capital, it is no surprise that Central London has outperformed all other sub-markets over the course of the recovery period.

Interestingly, this month saw a return to rental growth in the Outer London / M25 Offices sub-market, for the first time since March 2011.

The retail sector experienced pressure in September as capital values declined 0.3%, although the pace of decline is now slowing (following a decline of 0.4% in August). It is hoped that with positive GDP growth anticipated in Q3, hopefully in turn leading to stronger retail sales volumes figures, investor confidence may recover in this sector in the near future.

Leslie Schroeder, Senior Analyst at CBRE, said “There are some modest early signs of positivity emerging in the CBRE Monthly Index results this month, including positive rental growth in the M25 offices sub-market for the first time in 18 months and the pace of decline easing in All Retail capital values.”

CBRE UK Monthly Index snapshot – September 2012:
•All Property total returns were 0.2% in September, while capital values were down 0.3%
•Year to date, capital values have fallen by 3.2%.
•Yet again this month it is Central London offices that are the strongest sub-sector, with total returns in September of 0.5% and capital values of 0.1%.
•West End offices performed particularly strongly showing total returns of 0.7% in September and capital value growth of 0.3%.
•The pace of decline in retail capital values slowed again this month to -0.3%, as total returns were 0.2%.