Commercial Property Market Still Growing

The UK commercial property market continued to see positive capital growth this month, with values up by 0.2%, according to the CB Richard Ellis’ UK Monthly Index.

This is thanks to the Central London office market, which unlike the rest of the market, is enjoying strong growth because of the increasingly restricted supply and a positive rental growth outlook.

All property saw capital growth of 0.2% and a total return of 0.7%, with offices once again the top performing sector, with capital growth of 0.5% and total returns of one percent. All property rental values fell by 0.1% in October, with growth in Central London offices countering weakness elsewhere.

CB Richard Ellis said the surprising positive total property returns for this month is because capital values are continuing to defy weaker sentiment. But it also said the market continues to lack direction, and Central London aside, other subsector offices may be nearing an inflection point.

Contrary to the wider market slowdown, investment volumes are picking up, with total turnover for 2010 likely to surpass 2009’s £25bn, it said. Furthermore, UK institutions and foreign investors have been among the most active, accounting for around two thirds of the total investment so far this year.