UK commercial real estate capital values and returns dropped during 2020 as the Covid-19 pandemic battered business, although there were signs of an upturn at the tail end of the year.
Across all types of property, capital values nudged up by 0.3% during December, according to CBRE, the first such rise since October 2018. Industrial values grew by 2.7%, a record monthly increase, while a rise in central London lifted office values by 0.1%. Retail dropped by 1%. Total returns for the month across all properties, with rental growth flat, were 0.8%.
For the year, capital values dropped by 7.6% and rental values by 2.5%, leaving total returns at -2.2%. Across the year, industrial was the only sector to post a rise in either capital values or rental values, at 4.8% and 2.8% respectively.
Toby Radcliffe, analyst at CBRE UK, said: “Throughout the year the retail and, to a lesser extent, office sectors were challenged by the external pressures imposed by the Covid crisis. Meanwhile, the industrial sector thrived… 2020 ended on a positive note, with all-property capital value growth tentatively moving back into positive territory for the first time in over two years.
“However, with the UK starting 2021 in a third national lockdown, the extent to which the industrial sector can continue to bolster the all-property performance remains to be seen.”
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