August 8, 2022
Capital values decreased 0.5 percent across all UK commercial property in July 2022, according to the latest CBRE Monthly Index. Over the month, rental value growth was 0.3 percent. Total returns were -0.1 percent. In July, capital values for the office sector decreased 0.1 percent. Capital value growth was pulled down by Outer London and M25 offices and offices in the rest of the UK both reporting a decline of 0.3 percent. Central London offices posted a capital value growth of 0.1 percent. Rental values for the office sector increased 0.1 percent in July. Rental growth was driven by Outer London and M25 offices (0.4 percent) and rest of UK offices (0.3 percent). In July, total returns for the office sector were 0.4 percent.
Retail capital values were flat in July 2022. Over the month, capital values for Retail Warehouses increased 0.1 percent, resulting in the only retail commercial property subsector that did not report negative capital value growth. Standard Shops reported a capital value growth of -0.1 percent. After four months of positive capital value growth, Shopping Centres posted a decrease in capital values of 0.2 percent. Over the month, rental value growth was flat for the Retail sector. Standard Shops in the South East reported a rental value growth of 0.1 percent while rental values for Standard Shops in the rest of the UK decreased 0.2 percent. Rental values for Shopping Centres and Retail Warehouses were flat over the month. Total returns for the sector were 0.5 percent in July.
The Industrial sector posted a capital value growth of -1.4 percent in July. Industrials in the South East and Industrials in the Rest of the UK reported a capital value growth of -1.3 percent and -1.7 percent respectively. The Industrial sector has not reported negative capital value growth reported since June 2020. At the same time, rental values increased 0.7 percent over the month. Industrials in the South East (0.9 percent) posted stronger rental value growth than Industrials in the rest of the UK (0.7 percent). In July, total returns were -1.1 percent.
Jennet Siebrits, UK Head of Research at CBRE said: “After sixteen months of consecutive All-Property capital value growth, the results of CBRE’s July Monthly Index shows that outward yield movement has put pressure on capital value growth. While Industrial has shown the greatest fall in capital values, the sector continues to drive rental growth at the All-Property level.”