Commercial property values increased for the second consecutive month last month, according to the latest CBRE UK Monthly Index.
In June, capital and rental values rose 0.2% each, while total returns were 0.7%. Over Q2, capital values increased by 0.5%, rental values rose by 0.7% and total returns were 1.9%.
The retail sector was the strongest performer across the month. Capital values increased by 0.7% – predominantly driven by retail warehouse capital values rising by 1.2% – and month-on-month, total returns for the sector were 1.3% in June. Total returns for Q2 2024 were 3.1%.
Office capital values continued to fall, however, declining by 0.4% in June. In Central London and outer London/M25, office capital values only fell by 0.1%, but capital values across the rest of the UK office market fell 0.9%. Office total returns were 0.1% for the month and 0.2% for the quarter.
Industrial capital values, by contrast, increased by 0.4% in June and the industrial sector posted a month-on-month total return of 0.8% across June, with industrial total returns of 2.3% reported in Q2.
Jennet Siebrits, head of UK research at CBRE, said: “Strong monthly performance from the retail and industrial sector meant that UK all property posted a second consecutive month of capital value increases. Interestingly the retail sector has seen a small resurgence throughout the year, as capital values increased by 1.5% throughout H1 2024, bringing total returns to 5.1% in the first half of the year, the highest of all sectors.
“The office sector continues to be challenged, and the decline in capital values throughout June marks two years of monthly falls in values for the sector. However, West End offices saw capital values rise for the second consecutive month, and Central London office rental and capital performance continues to be more resilient than regional offices.”
