UK commercial property performance improved on last month, with values falling just 0.3% following the 0.5% fall in June. Overall total returns were 0.2% for All Property, with Central London experiencing the strongest total returns in July of 0.7%, driven by returns of 1.0% in the West End, according to CBRE’s latest UK Monthly Index.
So far this year, total returns have been muted, at 0.8%, but the negative tide that swept in earlier this year seems to be subsiding, with value declines easing this month.
Capital values have fallen by 2.6% this year, with offices seeing both the best and worst regional sub-sector level performance: Central London continues to move ahead of the pack, whilst regional offices have seen capital values fall 6.8%. Retail remained subdued this month with no total return recorded, a continuation of its underperformance relative to both the industrial and office sectors.
Central London saw a bounce in performance this month with capital value growth of 0.4% in July, after values flattened out in June. This strength is being driven from the West End, which saw a 0.7% improvement in capital values.
Nick Parker, Senior Analyst of Economics & Forecasting at CBRE, said: “It seems apt that amid the ongoing success of the London 2012 Olympics, that the property market in the Capital saw performance improve in July. This came as West End offices, long heralded as the UK’s Jewel in the Crown, saw a boost in capital values of 0.7%, as sizeable rental growth drove capital appreciation. As the Olympics draw to a close and the legacy of the Games is left in its place, this intense spotlight on London should reinforce the Capital as the leading global destination for investor purchases anywhere in the world.”
CBRE UK Monthly Index snapshot – July 2012:
- All Property total returns were 0.2% in July, with capital values down 0.3%.
- Year to date, capital values have fallen by 2.6%.
- Central London offices remain the strongest sub-sector, with values up by 0.4% over the month, an improvement on last month.
- West End was the star performer, with values up by 0.7% and total returns of 1.0% for the month
- Retail performance remained subdued this month but did see some marginal improvement on last month, with values down just 0.5%.
- Industrial property saw values fall by 0.2% in July, down by 1.5% so far this year.
- Rental values were again flat this month. So far this year overall UK rental values have fallen 0.3%.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2011 revenue). The Company has approximately 34,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.