Rents steady in UK commercial property market and decline in capital values slowed
Rental values across the UK’s commercial property market held firm for a second consecutive month in August, while the decline in capital values slowed significantly, according to the latest index.
Capital values fell by 0.5% in August, a much smaller decline than July which recorded a fall of 3.3%, suggesting a slowing of the Brexit effect, according to the monthly index report from real estate firm CBRE.
This trend was mirrored by total returns, which rose from -2.9% in July to -0.1% across the UK last month but slowing the recovery somewhat was the UK office sector with capital values falling by 0.8% in August.
The data shows that the fall of 0.9% in Central London office capital values in August was much smaller than July’s fall of 4.1%. City offices capital values fell by 0.6%, a fractional worsening compared with July’s fall of 6.1% fall.
Overall, rents were static in August. Offices in London’s West End and Midtown saw rental values drop by 0.3%, though Outer London/M25 offices performed better with rental value growth of 0.1%. Rental values grew slightly across UK retail property by 0.1%.
‘Despite fears that the UK property market would suffer significantly as a consequence of Brexit, August turned out to be a relatively stable month, with rents holding up and the drop in capital values starting to slow, and more quickly than many expected,’ said Miles Gibson, head of UK research at CBRE.
‘August is traditionally a quiet period, but this data provides good evidence for a fairly rapid re-pricing and continued resilience in occupier markets across the board,’ he added.