Office and Industrial capital values up marginally in Q2 2019 as Retail values fall -2.2%
Across UK commercial property, capital values fell -0.3% in June 2019, according to the latest CBRE UK Monthly Index. This brought Q2 capital value growth to -0.6% and -1.2% for the first half of 2019. Rental values decreased -0.1% over the last month and have fallen -0.1% over the quarter. All property total returns were 1.5% for the first half of the year.
Retail sector capital values decreased -1.1% in June. Overall sector performance was driven by falls of -1.3% in Shopping Centres and Rest of UK High Street Shops. Retail Warehouse capital values decreased in line with the sector average. Over the first half of 2019, capital values decreased ‑5.0%, again pulled down by Shopping Centres (-7.9%) and Rest of UK High Street Shops (‑5.6%). Retail rental values fell -1.8% over the half.
Capital values in the Industrial sector increased 0.2% in June. South East Industrials (0.3%) marginally outperformed Industrials in the Rest of UK (0.2%). Rental values increased 0.3% over the month. The Industrial sector reported an increase in capital values of 1.3% over H1 2019, while rental values increased 1.6%.
Office capital values were flat in June. While capital values in Outer London/M25 Offices increased 0.1%, Central London Office capital values fell -0.1%. Rest of UK Office capital values were flat. In the first 6 months of 2019, Office sector capital values increased 1.0%, pulled up by growth of 1.7% in Rest of UK Offices. Central London Office capital values increased 0.6% in H1. Rental values for the Office sector increased 0.6%.
Investors looking for excitement in UK property may be slightly disappointed by results from the first half of 2019. Results for June and Q2 mirror the trends reported so far this year and throughout 2019. Perhaps a stimulus will come in the second half of the year to enliven performance.