Growth speeds up in February
After a slower than expected start to 2010, the CB Richard Ellis Monthly Index for commercial property showed an acceleration in capital growth for February. Capital values rose by 1.4% last month, producing total returns for All Property of 2.0%.
The best performing sector in February was Central London offices, with total returns of 2.6% and capital growth of 2.1%. Shopping centres also did well, with total returns of 2.4% and capital growth of 1.8%. CB Richard Ellis says this sector is finally enjoying some catch-up after a very weak 2009.
Overall, rental values continued to decline, with an All Property fall of 0.2% suggesting that occupier markets remain under pressure, the group says. However, the flat rental growth reported for Central London offices in February indicates that occupier demand in the capital is stronger.
Nick Parker, CB Richard Ellis economics and forecasting analyst, commented: “Whilst it was prime yields that came back in most aggressively in the latter half of last year, it is the better secondary markets that are slowly starting to attract interest at the beginning of 2010, with investors beginning to look further up the risk curve in a hunt for better returns. It is widely expected that the yield gap between prime and secondary property will slowly narrow over 2010 as competition for good secondary assets becomes more heated.”
