London – 4 March 2010 – The latest CBRE Monthly Index for commercial property revealed a re-acceleration of capital growth in February, bouncing back after a slower than expected start to 2010. Capital values rose by 1.4% in February, producing total returns of 2.0% for All Property.
Central London offices once again were the best performers over the month, with total returns of 2.6% and capital growth of 2.1%. Shopping Centres also performed strongly, with a total return of 2.4% and capital growth of 1.8% in February, finally enjoying some catch up after a very weak 2009.
All Property rental values continued to decline, with a fall of 0.2% suggesting that occupier markets are still under pressure. However, Central London offices recorded flat rental growth in February, pointing towards firmer occupier demand in the capital.
Nick Parker, CB Richard Ellis Economics and Forecasting Analyst, commented: “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.”
The CB Richard Ellis Monthly Index showed: • The All Property total return was 2.0% in February, with annual returns of 13.6%. • All Property capital growth improved to 1.4% in February, up from 0.9% last month. • The strongest performing market sub-sector over the month was Central London offices, which recorded total returns of 2.6 %. • All Property rental values fell by 0.2% in February, Slightly worse than January’s fall. • All Property equivalent yields fell by 0.1% over the month, they are now at 7.2%.
View the Monthly Index here
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