The performance of UK commercial real estate worsened slightly in January, compared to the previous month. Research released by CB Richard Ellis (CBRE) noted that total monthly returns declined to 0.3 per cent last month from 0.5 per cent in December. Capital values also slipped marginally last month, dropping by 0.1 per cent. Senior analyst of economics and forecasting at the firm Nick Parker explained these results were not unexpected.
"Sentiment has been weakening in line with the global economic slowdown since the middle of last year, and whilst it is a weak start to 2012, performance this year will be largely dictated by how events unfold in the eurozone," he asserted. Mr Parker also highlighted the importance of overseas investors in the UK's commercial property market, noting it was this demographic that boosted transaction volumes at the end of last year; helping push them close to the GBP 34 billion mark by the close of 2011. Approximately GBP 5.5 billion of investment was ploughed into the UK's commercial real estate sectors in December, with Mr Parker describing this level of activity as "encouraging".
Property investments in London continued to outperform those elsewhere in the UK, the CBRE report revealed, with the firm citing the office market as an example. In the city, values slid by 0.1 per cent in January compared to December, while such premises in the outer London/M25 area experienced capital depreciation of 0.4 per cent in the same period. Earlier this month, IPD highlighted the growing discrepancy between the performance of commercial real estate assets in the UK's capital and its secondary markets. The organisation noted secondary office values in the rest of the country fell by 7.7 per cent over the course of 2011, while in London this asset class experienced price growth of 5.3 per cent in the same timeframe.
- Thursday 09 February 2012