Investors taking time to reflect – CBRE
Investors are increasingly in reflective mood, according to David Wylie, head of UK economics and forecasting at CB Richard Ellis. He says that following the significant re-rating of UK property seen in recent months, investors are now seeking “more compelling” signs of recovery in occupier markets before they commit themselves any further to the market. The main exceptions to this are the markets for Central London office space and Central London retail property, “where there is already evidence of income growth and investor appetite still appears to be strong”.
CBRE’s latest UK Monthly Index for August shows a slight slowing of the All Property total return to 0.8% from 0.9% in July. Capital growth increased by 0.3% thanks to a small amount of yield compression, as rental values remained unchanged from July. So far this year the total return is 12.3%, with capital values up 7.5%.
Overall, the total return from the offices sector was strongest at 0.9% with retail at 0.8% and industrial property again lagging behind as in previous months, with a return of 0.6%. Those sought-after Central London offices produced a total return of 1.0% while the return on offices in the Outer London/M25 area was 0.5%. For offices in the rest of the UK the figure was 0.7%. Within retail, shopping centres and retail warehouses performed broadly in line with the sector average, while High Street shops lagged behind with a return of 0.6%.
