The overall negative change in capital values was fairly broadly based in February, with valuations down across all three main market sectors. Shops, shopping centres and offices outside of Central London all posted negative total returns.
Occupier markets appeared to be more stable in February with no overall change in rental values at the All Property level. However, renewed growth in Central London offices was largely responsible for offsetting declines across nearly all other parts of the market.
Nick Parker, Senior Analyst of Economics & Forecasting at CBRE, said: “A general cooling in investor sentiment has been evident for the past nine months, but until recently, valuations haven’t been adversely affected to any great extent. Now, the power has shifted back to the buyers, but with this shift comes great opportunities for those that are able to act.”
“Foreign investors, less constrained by a tight domestic debt market, are continuing to target and focus on the UK and primarily London, as enduring uncertainties elsewhere in Europe sharpen the UK’s appeal. According to the latest CBRE Real Estate Investor Intentions survey released this week, a third of investors said that London was the most attractive real estate investment market in Europe for 2012, more than 20% ahead of the second-ranked city, Warsaw. Combine this finding with a healthy skew of respondents who said they intend to increase their overall purchasing activity in 2012 compared to last year, and the picture for the commercial property markets in London and the UK looks quite positive.”
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