July saw a slight improvement in the UK commercial property market according to the latest monthly index from CBRE. Although values are still falling, the figures show that the decline has eased in comparison to June’s negative performance. Overall values fell by just 0.3 per cent following a fall of 0.5 per cent in the previous month.
The index shows that returns were 0.2 per cent for all property with Central London, unsurprisingly, recording the strongest performance with total returns of 0.7 per cent. In terms of the year to date, total returns have been modest at 0.8 per cent but, once again, there are signs that the market decline is slowing.
Capital values fell by 2.6 per cent with retail property in particular continuing to underperform in relation to both the industrial and office categories. There also appears to be a sharp contrast between performance in London and the regions. This is clearly illustrated by the 6.8 per cent fall in the capital value of regional office space while the West End experienced a 0.7 per cent improvement.
Senior analyst Nick Parker said that it’s apt that property in the capital is performing so well against the backdrop of Team GB’s ongoing Olympic success.
He continued to say; “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.”
Meanwhile Allsop’s recent commercial auction also provided encouraging signs for the market. The July auction was the biggest of the year, raising £56.3 million from a 72 per cent success rate. High quality multi-tenanted property and distressed assets attracted the most competitive bidding.
Allsop auctioneer Duncan Moir said; “There is significant demand for asset management opportunities. Having sold nearly 400 properties so far this year we know where properties need to be priced in order to motivate buyers.”
Taken together, the CBRE monthly index and the results of Allsop’s commercial auction suggest that the decline in UK commercial property values is easing. Investors and industry analysts will now be keen to see whether this is a blip or an indication of a wider market recovery.
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