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Central London Office Yields Boost Commercial Growth in UK

Capital values across the UK’s commercial property market increased 0.4% in May 2017, apparently unaffected by the snap general election announcement, according to the latest office index from CBRE shows.

The national average was pulled up by Central London offices, where capital growth was the result of yield movement while all property rental values increased 0.1% over the month, according to the latest CBRE monthly report.

The office sector recorded capital values increasing by 0.6% on average in May, boosted by West End and Mid-Town offices where capital values increased by 1.1% month on month due to yield movement.

City office rental values fell by 0.1% for the second month, while Outer London/M25 offices boosted the national average with rental value growth of 0.3%.

Slowed Growth Recorded in Industrial Sector

The index data also shows that capital value growth in the industrial sector slowed slightly to 0.5% in May from 0.6% in April. While industrials in the rest of UK reported capital value increasing 0.2% over the month, South East industrial capital values rose 0.6%.

Rental values in the sector increased 0.2% in May, driven by South East industrial performance of 0.2% while industrials in the rest of the UK recorded stable rental values.

‘This was largely another steady as she goes month for UK commercial property, with capital growth and total returns at respectable levels, but driven by yield movements rather than rental growth,’ said Miles Gibson, head of UK research at CBRE.

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