UK commercial property performance diverges in November

November UK Monthly Index snapshot:

• All property values rose by 0.2% over the month, producing total returns of 0.7%.
• Offices were again the top performing sector, with capital growth of 0.4% and total returns of 0.9%.
• Industrials were the weakest performing sector, with total returns of 0.3% following a capital value correction of 0.3%.
• Retail performance showed some deviation in November, with retail warehouse returns improving to 1.1%, while shopping centres suffered a reverse with total returns of only 0.2%. High-street shops returns were up by 0.7%, in line with the All Property average.
• All Property rental values fell by 0.1% in November, with growth in Central London offices countering weakness elsewhere.

David Wylie, Head of UK Economics & Forecasting, CB Richard Ellis, said: “While overall returns remained positive and displayed a surprising degree of stability over the past month, there was a marked degree of divergence between market sub-sectors. Performance in Central London offices stands out once again, with returns having out-paced the other sub-sectors for much of the year.”

Highlights from November’s UK Monthly Index:

• All Property capital values were up by 0.2% in November, with total returns of 0.7%. Despite positive overall capital growth, values fell across four of the seven sub-sectors, with stronger growth in Central London offices offsetting weakness elsewhere.
• Offices out-performed the other two sectors over the month, returning 0.9%, compared to 0.7% for retails and 0.3% for industrials.
• The strongest performing sub-sectors over the month were Central London offices and retail warehouses, which returned 1.4% and 1.1% respectively.
• Rental growth at the All Property level fell by 0.1% in November, a similar rate of decline as seen in the previous month.
• All Property equivalent yields remained unchanged at 6.8% for the second successive month, and were flat across all three main sectors.

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