UK commercial real estate(CRE) capital values rose 1.3% in April 2022, according to the latest CBRE Monthly Index. This growth was driven by retail warehouses and industrials.
Over the month, rental values rose 0.3%. Total returns were 1.7%.
Retail reported strong capital value growth for the second consecutive month albeit at a reduced rate. In April, capital values increased 1.7% compared to 2.9% in March. Capital value growth continues to be driven by retail warehouses where capital values increased 2.7%. Both Shops in the rest of the UK and in the South East reported a capital value growth of 0.6%.
Rental values for the retail sector decreased -0.2% over the month. Rental value growth was pulled down by shopping centres with values decreasing -0.6% in April. Retail warehouses reported a slight decrease in rental values at -0.1%. Rental growth for Standard Shops remained flat over the month. Total returns for the Retail sector were 2.2%.
The office sector posted capital value growth of 0.6% over the month. City Offices was the strongest subsector with capital values increasing 0.9%. Capital values in the Rest of the UK Offices increased 0.7%. Capital growth for the Office sector was pulled down slightly by West End and Midtown Offices (0.4%) and Outer London and M25 Offices (0.3%). In April, Office rental values rose 0.1%. Total returns for the sector were 0.9%.
In April, capital values increased 1.9% for the industrial sector. Capital growth was driven by industrials in the rest of the UK with values increasing 2.2%. Industrials in the South East reported a growth slightly below the sector average at 1.7%. Rental values increased 0.8% over the month. Industrial total returns were 2.1% in April.
”The results of CBRE’s April Monthly Index shows solid All-Property capital growth continuing from Q1. Indeed, growth in April equaled the average growth over the first three months of the year. Retail warehouses continue to drive retail performance and April is the second consecutive month that retail warehouses have outperformed other all other sectors in terms of capital growth. The modest fall in rental values for retail warehouses shows that capital growth is being driven more by yield contraction than rental growth. Meanwhile, capital growth for the industrial sector slowed slightly in April compared to February and March,” said Marlyn Chantre, Research Analyst, CBRE.