Flat November performance for UK commercial property – CBRE
Commercial property in the UK produced a largely flat performance in November, says CBRE, with values at the All Property level falling by 0.2% after a 0.1% decline in October. The firm’s latest Monthly Index shows that capital values across all UK property have fallen 3.5% so far this year, with total returns coming in at 1.7%. Total returns for November were 0.2%.
Capital values fell in November in all the major sectors apart from Central London offices, where values rose by a “healthy” 1.0% last month, CBRE says, following another strong performance of +0.9% in October. The figures in both months have been boosted by the strength of the West End offices submarket, the firm notes.
Apart from this pocket of growth, “the wider occupier market continues to be a challenge,” CBRE says, with rental values producing little growth in most sectors. Overall rental growth came in at +0.1% for November, taking the figure for the year so far to –0.5% across All Property. But having said this, November did produce the first rental growth of the year in the retail sector – in fact, the first rental growth in the sector since October 2011. The overall rise of 0.1% for retail reflected increases of 0.3% in the Standard Shops sector and 0.2% in the Retail Warehouse sector.
CBRE says the UK remains a safe haven for property investors compared with the rest of Europe, despite the flat figures for November. The firm’s research shows that the UK has seen the highest level of investment turnover this year across European markets, says senior analyst Leslie Schroeder – although this investment has been strongly focused on office space in Central London.
“While the central London office sector has seen values increase 3.3% year to date, Rest of UK offices have experienced an equivalent capital decline of 10.9%,” he points out. “However, if investors start to see better value in the UK regions, we may yet see renewed interest in this sector of the market.”
Yet more evidence that the London economy is becoming de-coupled from the rest of the UK, with London commercial property values and rents (as with the capital’s residential values and rents) bearing little relation to trends in the rest of the country.