Despite the challenges imposed by UK national lockdown, January sees only slight value declines

Capital values fell -0.1% across all UK Commercial property in January 2021, according to the latest CBRE Monthly Index. Over the month, rental values were unchanged at 0.0%. Total returns were 0.4%.

The Retail sector started the new year with continued decreases in values. However, despite a continued national lockdown, the scale of decline in January was less than during much of 2020. Over the month, capital value growth was -0.6%, the smallest fall since May 2019. High Street Shops performed better than the sector average with capital values falling only -0.2%. Retail rental values declined -0.2% in January, the smallest decline in 12 months. Retail total returns were 0.0% for the month, the first month not to post negative returns since April 2020.

The Office sector posted capital value growth of -0.3% over the month. Within this, Central London Offices performed slightly better posting a decrease of only -0.1%. In contrast, Outer London and M25 Offices reported the greatest decrease of -0.7%. Average Office rental values were stable at 0.0% in January, although Central London Offices saw values increase 0.1%. Office total returns were 0.1% for the month.

After a very strong end to 2020 the Industrial sector has seen slower growth in January 2021. Over the month Industrial capital values rose 0.6%. Industrials in the rest of the UK reported slightly stronger growth at 0.7%. Over January rental values increased 0.1%, both Industrials in the South East and the rest of the UK increased by sector average. Industrial total returns for the month were 1.0%.

Property values have started the new year by moving back into negative territory after a brief period of positive growth in December 2020. However, in the context of a third national lockdown, the decreases in value are small. This is especially the case for Retail where the fall in capital values was the lowest in the past 19 months. Meanwhile, Industrials are off to a slightly subdued, although solid, start to the year.
Toby Radcliffe, Research Analyst, CBRE