Modest early signs of positivity – CBRE Monthly Index
For the third month in a row, UK commercial property total returns were 0.2% in September, according to the latest Monthly Index from CBRE. The firm says the overall total returns figure was again boosted by Central London office property, which produced total returns of 0.5% last month, taking the figure for the capital’s office sector to 4.9% for the year to date.
“With strong investor interest in prime property and prime locations and prices being driven by international capital, it is no surprise that Central London has outperformed all other sub-markets over the course of the recovery period,” the firm notes.
Capital values at the All Property level fell by 0.3% in September, taking the year-to-date figure to 3.2%. Capital values for Central London offices rose by 0.1%.
Another area of strong performance was West End office space, which produced total returns of 0.7% in September and capital value growth of 0.3%. There was also a return to rental growth in the market for office space in the Outer London / M25 region, for the first time since March 2011, CBRE noted.
The retail sector remained under pressure, however, with capital values falling 0.3% last month. CBRE says that the pace of decline in this sector is slowing (in August, capital values fell 0.4%) and thinks that some recovery in consumer confidence is possible in the near future, with positive GBP growth expected in Q3 in turn hoped to lead to stronger retail sales volumes. Total returns for the retail sector in September were 0.2%.
Leslie Schroeder, senior analyst at CBRE, said “There are some modest early signs of positivity emerging in the CBRE Monthly Index results this month, including positive rental growth in the M25 offices sub-market for the first time in 18 months and the pace of decline easing in All Retail capital values.”
