Commercial property values rise in CBRE index

  UK commercial property capital values rose 1.4% in February, according to the latest CBRE monthly index.   The figures helped produce total returns of 2% for all property.   The increase is a bounce-back from a slower than expected start to 2010, when capital values climbed 0.9%.   CBRE said central London offices were once again the best performers with total returns of 2.6% and capital growth of 2.1%.   All- property rental values continued to decline, with a fall of 0.2% suggesting occupier markets are still under pressure.   However, CBRE said Central London offices recorded flat rental growth in February, pointing towards firmer occupier demand in the capital.   Nick Parker, CBRE economics and forecasting analyst, said: “The general sentiment in the market currently is that property is approaching fair value, with ongoing yield compression expected in the short term.   “Whilst it was prime yields that came back in most aggressively in the latter half of last year, it is the better secondary markets that are slowly starting to attract interest at the beginning of 2010, with investors beginning to look further up the risk curve in a hunt for better returns.   “It is widely expected that the yield gap between prime and secondary property will slowly narrow over 2010 as competition for good secondary assets becomes more heated.”   nathan.cross@estatesgazette.com