UK commercial property returns improve in October – CBRE
Total returns from UK commercial property improved last month, reaching a ‘modest’ 0.4% according to the latest CBRE Monthly Index after September’s 0.2% return. Capital values at the All Property level also improved as the decline slowed down to just 0.1% after a 0.3% fall in September.
Yet again Central London office space produced the strongest returns, at 1.3%, with capital value growing 0.9%. The year-to-date total return for offices in Central London has now reached 6.2%, in sharp contrast to the negative 4.4% return for offices in the rest of the UK. Capital values for Rest of UK offices have fallen 9.6% since the start of 2012.
In September there was a gain for offices in the outer London/M25 region – the first for 18 months – but this has now been offset by an equivalent 0.1% decline in October.
Retail property remains under pressure, which CBRE says is no surprise following weak retail sales figures. Total returns for retail property in October were 0.1% and capital values declined 0.3% for the second month in a row. For the sector so far this year values are down 4.6%.
Investors have remained cautious towards all but the best stock, says Leslie Schroeder, senior analyst at CBRE. “However, at some point the substantial pricing differential between London and the rest of the UK will undoubtedly start to attract investors”.
