Commercial property values stall in November

CBRE November Monthly Index reports total returns down by 0.2%

Article posted: 12 Dec 2011

After seven months of incremental capital value increases, UK commercial property values stalled in November, with total returns of 0.4%, down from the 0.6% recorded in October, according to CBRE’s latest UK Monthly Index.

Year-to-date total returns for commercial property are now 7.6%, with capital growth of 1.9% over this time. Central London capital growth managed to remain positive, although the majority of other sub-sectors saw marginal decreases in values. Shops and retail warehouses were the only other two major sub-sectors to avoid falls in values this month, with shopping centres, industrials and offices outside the capital all seeing values slide in November.

Rental values held firm in November, as weakness in shops, shopping centres and office space in the UK regional market were offset by growth in the market for office space in Central London and the retail warehouse sector. So far this year, rents remain flat on the CBRE Monthly Index.

Nick Parker, Senior Analyst of UK Economics & Forecasting at CBRE, said: “November was the first month this year where more widespread weakness started to creep into the UK property market performance with more real estate sub-sectors seeing capital value falls than gains. This comes as little surprise to most observers, with market momentum gradually fading over the past seven months. Given the wider economic uncertainty caused by weak fundamentals in the UK economy plus the growing threat posed by the Eurozone, it now seems that investor appetite has once again become more narrowly focused on the super-prime end of the quality spectrum at the expense of assets further up the risk curve.”

A full copy of the report is available at: http://www.cbre.co.uk/portal/pls/portal/CBWEB.utils_news_public.show_image?id=9260&field=doc1&trans=n

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Posted by Jules