Alternative property types holding up well – CBRE
Capital values for UK commercial property dipped by 0.3% in August, says CBRE, with total returns mirroring July’s performance at 0.2%. The firm’s latest Monthly Index shows that Central London property markets have continued to lead the way with values still growing in the capital while they have continued to slide elsewhere. Year to date capital values are down 2.9% overall, with total returns at 0.9%.
Central London office space continued to outperform with values up 0.2% in August and 1.2% higher so far this year thanks to investors’ focus on prime assets. Total returns from Central London offices were 0.5% last month. CBRE says this has helped to stabilise the All Office capital values reading for the whole of the UK, which is down 1.7% for the year so far.
Beyond the capital the picture for the retail sector remains subdued, CBRE adds, with values down 0.4% in August and 4.1% lower so far this year amid weaker occupier demand.
CBRE notes in its latest report that its ‘All Other’ property category has done relatively well so far in 2012 with values down only 0.9%. Property in this sector includes alternative investment asset classes, which wary enormously, from car showrooms, gyms and cinemas to high-tech datacentres. CBRE’s Nick Parker, senior analyst of economics and forecasting, notes that some of these assets offer more annuity-style secure income streams for investors, “which is ultimately what investors have been targeting since capital values stuttered last year”.
“The diverse nature of the sector means that it is difficult to benchmark it versus others, but they have certainly outperformed all other asset classes in the year to date, with values only marginally down,” he adds.
