Record Rental Value Helped 2015 Perform Strong for Investment

Posted on 12 January, 2016 by Chris Grigorovsky

With help from the highest rental value growth since 2008, the total return on investment from the UK commercial property sector at the end of 2015 was strong, reaching 14% along with December delivering returns of 1.1%, CBRE’s latest Monthly Index reveals.

Record High Rental Value Helped 2015 Perform Strong for Investment

In 2015, it reports that all property rental values overall grew by 4%, which is the highest growth since the recession. Rental value growth in December was stable at 0.4%, the same figure it has been since September.

The year ended at a substantially higher point than 0.2% in January 2015 and ahead of the monthly average of 0.3% throughout 2015.

It was also reported that two areas in London, West End and Midtown, saw rental value growth in offices halved, slowing from the 1.3% in November to 0.7% in December. However, despite this slowdown, Midtown offices performed the best in 2015, getting an annual total return of 22.9%.

Throughout December, the capital value growth across all commercial property sectors and regions remained flat at 0.7%, which has been below 1% since January last year.

Meanwhile, over the whole of 2015, capital values saw an 8.3% growth, behind 2014’s 12.9%. Offices was the sector that saw the strongest capital value appreciation in 2015 with 12.8%, followed closely by Industrial at 11.2%.

Commenting on these findings, Head of UK Research at CBRE, Miles Gibson, said: “An urgency to close deals in the last month of the year meant that total returns spiked quite significantly in December 2013 and December 2014. This simply didn’t happen in 2015.

“Nevertheless rental and capital values both performed well for investors in 2015, continuing the upward trend seen in the last few years.”




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