London,
08
November
2018
|
11:02
Europe/London

UK commercial property capital values increase 0.1% in October as Retail woes continue

At the All Property level, UK commercial property capital values increased 0.1% in October, according to the latest CBRE UK Monthly Index. Rental value growth was flat for the third consecutive month. All UK Property total returns for the year to date reached 6.3% in October.

Industrial sector capital values increased 0.7% in October, pushing capital growth for 2018 so far into double digits at 10.2%. Contrasting previous months results, capital growth in Industrials in the Rest of UK (0.8%) slightly outpaced those in the South East (0.7%). Rental values increased by 0.2%.

Capital values in the Office sector increased 0.4% over the last month, driven by growth of 0.8% in the Rest of UK markets. Central London Office capital values increased 0.2% in October, while values rose 0.3% in Outer London/M25. Office capital value growth reached 2.5% for the year to date in October. Rental value growth for the sector was 0.2% in October, with City and Outer London/M25 Offices reporting flat rental values. All other submarkets recorded rental growth in line with the sector average.

Retail sector capital values decreased -0.6% in October. Capital values in Rest of UK High Street Shops fell -0.7% over the month while values in the South East were flat. Retail Warehouse capital values decreased -0.6% in October. The Retail sector’s October results were pulled down by a decrease of -1.2% in Shopping Centres. Shopping Centre capital values have fallen -6.8% in 2018 so far, bringing year-to-date total returns for the subsector to -1.9%. Retail sector rental values fell -0.2% over the last month.

Robin Honeyman, Research Analyst at CBRE UK
With the notable exception of Shopping Centres, income returns have helped keep Retail sector total returns positive in 2018 so far. However, double-digit returns for the year-to-date in the Industrial sector continue to boost All Property results and conceal the divergent fortunes of the two sectors.
Robin Honeyman, Research Analyst at CBRE UK