UK commercial property performance was positive in May with capital values increasing by 0.1% across all property sectors, a new report shows.
So far this year, UK capital values have declined by 0.3% and for the month, total returns remained at 0.6% delivering 2.4% over the year to date, according to the latest CBRE UK Monthly Index.
It is the first time that the index has recorded positive change in capital values across all sectors in the month of May since 2011.
Offices capital value growth was recorded at 0.2% and total return at 0.7% in May. This was mainly driven by the Central London offices market with strong performance in the West End in particular. Capital values in West End offices increased by 0.8% over the month and total return was 1% in May, up from 0.5% in April.
Due to low investor demand, the rest of UK offices recorded the lowest capital value growth across all segments with a decline of 0.7%.
In the retail sector, capital values increased by 0.1% over the month, with positive growth seen across all segments. Total return remained unchanged at 0.6%. Shopping Centres again recorded the strongest performance in the retail sector.
Rental values across UK property were flat for the fifth consecutive month in May. The strongest rental value growth was in City offices at 0.5% over the month, while rental values in Outer London/M25 offices dropped by 0.2%.
‘Encouragingly, for the first time since November 2011, we witnessed positive change in capital value across all sectors in May. This meant that total returns at the all UK property level, while still subdued, are at their highest since summer 2011,’ said Aleksandra Starczynska, analyst at CBRE research.
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