Multi-family capital values in the UK rose by 1.2% over the year to March 2023, according to CBRE’s inaugural UK Multi-family Index report.
Multi-family was the only sector to rise in value in the 12 months leading up to March 2023.
The falling capital values of other commercial property types over the same period included retail values declining by 11.6%, office values falling by 14.2% and industrial values reducing by 25.9%.
Multi-family capital value growth was driven by assets located outside London. Assets across the rest of the UK saw an increase in capital values of 2.5% for the year to March 2023, whereas assets located in London saw capital values decline by 0.7% over the same period.
However, assets located in London reported stronger rental growth, at 10.1% for the year to March 2023 compared with 7% for those in the rest of the UK.
The reason for lower capital growth for multi-family assets in London was the fact that yields rose more sharply than in locations outside London.
Jason Hardman, CBRE executive director of residential valuations, said: “The results from our multi-family index show that multi-family properties have been resilient for investors, continuing to deliver rental and capital growth in the face of the challenges presented by economic uncertainty, high inflation and rising interest rates over the past 12 months.”
Jennet Siebrits, CBRE’s head of UK research, said: “This new index tracks capital value growth, rental value growth and yield movement using a sample of multi-family assets valued by CBRE. This index will enable the investment performance of multi-family properties to be compared more easily with that of other property types such as office, retail and industrial assets.
“It was important for us to include multi-family in our performance monitoring as it has developed into a mainstream investment asset over the past decade. While 10 years ago residential investment made up just 3% of total UK CRE investment, it now makes up 15%. According to our latest investor intention survey, it is now the most popular asset class for investors into the UK – with 30% selecting residential as their favoured sector. This reflects the growing need for quality rental stock in the UK.”
To send feedback, e-mail akanksha.soni@eg.co.uk or tweet @AkankshaEG or @EGPropertyNews
