Commercial property returns growth 'steady' in June

Capital values grew by 0.1% over the month, a drop on 0.2% in May. But the 0.6% total returns for the month matched returns seen almost every month of the year to date.

In H1 as a whole, rental value growth hit 1.1%, trailing the 1.7% seen in the same period of 2015. Capital values grew by 0.6% for H1 2016, some way shy of the 4.1% in H1 2015. Total returns were also lower, from 6.7% in H1 2015, to 3.0% in H1 2016. This lower return partly reflects an increase in stamp duty land tax in March.

Miles Gibson, Head of Research at CBRE UK, said:

“Overall, rents and capital values continued to grow in June, with the industrial sector in particular showing strong growth in a month of significant uncertainty. Clearly, capital value growth has slowed, but occupier demand has remained high across the country, pushing up All Property rental growth as fast as any other month this year.

“These figures reflect CBRE valuations carried out in the days immediately following the referendum vote, but July’s monthly index will give a much clearer indication of how monthly-valued assets have been affected by the uncertain environment for commercial property in the aftermath of the Brexit decision. In the meantime, CBRE’s 30 June valuations incorporated a formal Valuation Uncertainty clause.”