Capital values increased 0.8% across all UK Commercial property in June 2021, according to the latest CBRE Monthly Index. This is the highest All Property capital growth figure since December 2017. Over Q2 2021 capital growth was 1.8%. In June, rental values increased 0.1% and total returns for the month were 1.3%.
The Retail sector reported a 0.5% growth in capital values over Q2 2021, as well as 0.5% growth in June. This is the highest monthly increase in values for the sector since December 2015. Within this, the strongest subsector was Retail Warehouses, which saw capital values rise by 1.0%, its strongest monthly capital growth in seven years. Meanwhile, High Street Shops posted a relatively strong growth of 0.3%, and the persistent negative Capital growth for Shopping Centers slowed to only -0.3%, which is the smallest decrease since August 2018. In June, Retail rental values declined -0.1%. All Retail subsectors recorded declines in rental values over the month. Retail total returns were 1.1%.
The Office sector saw capital value growth of 0.0% over June, bringing growth in Q2 2021 to -0.2%. This reflected divergent growth for Central London offices and those in Outer London and the Rest of the UK. Central London Offices posted growth of 0.2%. Conversely, capital values for Outer London/M25 Offices decreased by -0.1% and Rest of UK Offices fell by -0.2% in June.
In June, Industrial sector capital value growth reached 2.3%, up from 1.6% in May. Industrial sector monthly capital value growth was stronger in the South East, posting the greatest growth of 2021 at 2.7%, compared to 1.6% in the Rest of UK. Quarterly capital growth for the Industrial sector was 5.9%, with Industrials in the South East again performing better than those in the Rest of UK, with respective quarterly growth of 6.3% and 5.1%. Industrial rental value growth was 0.5%. South East Industrials saw rental growth of 0.7%, greater than the Rest of UK at 0.2%. Industrial total returns for the month were 2.7%.
Toby Radcliffe, Research Analyst at CBRE said: “June was the fifth consecutive month of positive capital growth at the all property level, posting the strongest growth in over three years. This is further evidence that a post Covid-19 rebound in values is underway. The standout feature of the month was Retail performance with positive capital growth driven by rising values in all sub-sectors, except Shopping Centres, suggesting that declining Retail values may now have finally bottomed out. This is highlighted by Retail warehouses which in Q2 2021 reported the greatest capital growth since Q3 2014.”