CBRE: Property values stalled in November

By Paul Norman - Thursday, December 08, 2011 13:45

UK commercial property values stalled in November following seven months of incremental capital value increases.

According to CBRE’s UK Monthly Index, November saw total returns of 0.4%, down from the 0.6% recorded in October.

Year-to-date total returns for commercial property are now 7.6%, with capital growth of 1.9% during the period.

Central London offices again saw the strongest sub-sector returns at 0.7%, with capital values up by 0.3%, and rental growth of 0.3%.

The Outer London/M25 Office sector was the weakest property sub-sector this month, as values fell by 0.5%, delivering a marginally positive return of 0.1%.

Rest of UK office total returns also weakened in November to 0.2%, on a par with the Shopping Centres.

Retail warehouse and High Street shop capital values were unchanged, with both sector delivering total returns of 0.5%.

Industrial property saw values fall by 0.1% again, with total returns of 0.4%, a marginal deterioration on the previous month.

Overall rental values were flat over the month, with the year to date also seeing rental values unchanged. Equivalent yields were unchanged over the month, staying at 6.5%.

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.”

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