Capital growth in 2011 was 1.9% – CBRE
Commercial property markets in the UK during December followed the pattern seen in previous months, with total returns of 0.5% and no overall change in capital values, says CBRE.
CBRE’s Monthly Index for December shows that total returns for the whole of 2011 reached 8.1%, a figure the firm describes as “relatively healthy”. David Wylie, head of economics and forecasting at CBRE, says given the broader economic background this was a respectable performance, and points out that it compares favourably with other main asset classes. As has been previously noted, however, returns were mainly due to income, as capital growth (1.9% for the year) was modest, and seen only in the first half of 2011.
There were sharp differences by sector during the month, with Central London office space and retail warehouses producing returns of 0.8% and 0.7% respectively but falling values in all other market subsectors. Over the year, Central London offices (12.7%) and retail warehouses (9.0%) were also the best performing subsectors.
Offices in outer London and the M25 area (total return 0.1%), and elsewhere in the UK (zero), underperformed during December, with the income return in both cases largely or wholly offset by falls in capital values. These two subsectors were the weakest for the full year, with total returns of 4.8% and 3.3% respectively, CBRE noted.
The offices sector as a whole produced returns of 9.2% for 2011, while retail property and industrial property each recorded returns of 7.4%.
Rental values were flat in December, and for the year as a whole. The Central London offices market saw modest growth, but this was offset by falls in in the retail sector and in industrials.
