Central London still outperforming – CBRE
The results of January’s Monthly Index from CBRE show a continuation of last year’s trends, with central London outperforming the rest of the country. However, the gap between the capital and the rest of the UK narrowed last month, with Central London total returns outperforming industrials by just 10bp, the firm notes.
The Monthly Index for January showed All Property total returns of 0.7% and capital growth of 0.2%, following the stronger than expected finish to 2010. Last year, annual returns totalled 16.1% with capital growth at 8.9%, which CBRE notes is the highest since 2006.
Industrial returns bounced back in January to make this the strongest sector, with total returns of 0.8% and capital growth of 0.3%. All retail subsectors reported positive capital growth – although this was at a slower rate in December. Retail warehouses saw capital growth of 0.3% while shops edged up 0.1%. The retail sector overall posted a total return of 0.6%. Offices in the City of London outperformed again, beating West End offices, but office space in the rest of the UK continued to decline in value, reporting a 0.1% decline in total returns in January. The outperformance in central London helped to boost the offices sector overall to positive capital growth of 0.2% and a total return of 0.7%.
Nick Parker, senior analyst at CBRE, noted that January had seen a further marginal fall in rental values at the All Property level, showing ongoing weakness in most occupier markets. “Offices in the regions displayed the weakest performance in January, with rents falling 0.3%, whilst Central London offices continued to see positive growth. This illustrates why there has been and will continue to be divergent performance between Central London and the regions,” he added.
