The performance of commercial property in the UK weakened this February according to CBRE’s latest Monthly Index. Total returns for commercial property in the UK fell to 0.1% and capital values fell by 0.4%. The downturn in commercial property performance came in spite of the fact that Central London offices have seen an improvement, with returns up from January, from 0.3% up to 0.5%. The weakening of property valuations covered the three main commercial property market sectors, shopping centres, shops and offices located outside of the Central London area.
On a more positive note, Central London offices have seen renewed growth, which is responsible for offsetting the decline of most parts of the commercial property market. Central London office property values saw an increase of 0.1% for the month.
According to the CBRE’s February 2012 UK Monthly Index survey total returns on all property were 0.1% for the month, with capital values down 0.4%. The retail property market suffered the most in February, providing a return of -0.1%, while industrial property returned 0.4% and offices returned 0.2% overall. Office property values for the rest of the country fell to 0.9% in February.
Rental values showed an improvement over the previous month while retail centres, shops and shopping centres suffered weaker returns, at -0.3%.The report went on to say that a third of commercial property investors have said that London is the most attractive property investment in the EU, ahead of Warsaw by more than 20%.
According to the CBRE’s Senior Analyst, Nick Parker, foreign investors are continuing to target and focus on the UK, and London in particular. Mr Parker said “this was because foreign investors are less constrained by a tight domestic debt market.” He also stated ‘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.”