Stronger UK commercial property markets in June – CBRE
The UK commercial property market improved significantly during June, with total returns at the All Property level of 0.7%, says CBRE. This takes total returns during the second quarter of 2013 to 1.9%. Capital values continued to grow, rising 0.2% in June and 0.3% for Q2.
The offices sector produced total returns of 1.0% and capital value growth of 0.5% last month, with Central London office space again performing strongly with total returns of 1.1%, driven by a 0.7% increase in capital values, CBRE says. The best performing segments within the sector were West End offices and Midtown offices with total returns of 1.4% and 1.1% respectively, and capital value growth of 1.0% and 0.6% respectively. Capital values also increased in Outer London/M25 offices, up 0.6% last month with total returns at 1.3%. Rest of UK offices continued to underperform, although the rate of decline in capital values slowed, at -0.4% for June.
Within Retail, the high street shops and retail warehouses segments were stable in June, but shopping centres recorded a decline of 0.7% in capital values, after three months of strong performances, and this was the weakest retail segment last month. Total returns for the retail sector slowed to 0.4% in June from 0.6% in May, while capital values dropped by 0.1%. For the second quarter of 2013, All Retail total returns were 1.6% and capital values edged up 0.1%.
The industrial property sector performed well in June, after a long period of falling or flat capital values. Last month capital value growth was 0.5% and total returns 1.1%, to take the total return for the second quarter to 2.3%.
Rental values at the All Property level remained flat last month: the highest rental value growth was in City offices at 0.6%, whereas rental values for Rest of UK offices fell 0.2%.
Aleksandra Starczynska, Analyst, CBRE Research, said: “At the turn of the year, capital values were still falling, but we have now recorded three consecutive months of growth. It remains the case that Central London offices are outperforming the rest of the market, but other sectors and segments have shown continued improvement during the year.”