FINANCE: UK commercial property returned 1.4% in November, down slightly from 1.5% the previous month, according to the CBRE Monthly Index.
Capital values were the main driver of returns, rising by 1% in November.
Offices overtook industrials as the highest-returning sector, with a 1.8% total return. Industrial performance tailed off in November to a 1.7% total return, following October’s 2.3%.
Retail continued to lag the other sectors with a 1.1% total return, of which 0.6% was capital value growth.
Property has returned 17.8% year-to-date, and is now on track to achieve a return of just over 19% in 2014, according to Michael Haddock, senior director of research at CBRE.
Rental value growth in central London offices has accelerated this year, rising by 7.1% during the year to the end of November – the highest rate out of any of the markets monitored by CBRE.
Haddock said “For some time we have expected that rental growth would take over as the main driver of capital value growth in central London offices. Although yield shift is still an important component of capital value growth in central London, it is notable that the contribution from rents is becoming bigger. In the first eight months of the year, yield impact accounted for 60% of capital value growth. However, this has dropped to 41% in the past three months.”
