Build-to-rent multifamily capital values declined by 2.2% over the year to September 2023, according to the results of the latest CBRE UK Multifamily Index.
The fall in capital values occurred despite the properties in the index recording strong rental growth, with rental values increasing by 9.5% in the year to September 2023.
The benefits from rental growth were countered by outward movements in capitalisation rates, which rose by 42 basis points over the last 12 months.
Additionally, multifamily assets in London saw values declining by 5.7% in the year to September 2023 whereas the rest of UK saw an 0.8% increase in values for multifamily assets.
This difference reflects capitalisation rates for multifamily assets moved more strongly in London, increasing by 59 basis points compared with 28 basis points for assets located elsewhere.
However, assets in London reported stronger rental value growth, at 10.9%, whereas multifamily properties located in the rest of UK saw rental value growth of 8.5% for the year to September 2023.
In comparison with the performance of commercial property over the same period, the capital value of multifamily assets fell by 2.2%, retail capital values declined by 12%, office capital values fell by 18.5% and industrial capital values declined by 19.4% over the year to September 2023.
CBRE head of UK research Jennet Siebrits said: “While investors would not have wanted to see a fall in capital values, the performance of multifamily assets has been resilient in comparison with other commercial real estate sectors.
“In that context, it is not surprising that investors continue to exhibit strong interest in the sector, as demonstrated by our recent European investor intentions survey.”
Photo © Philip Silverman/Shutterstock
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