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CBRE Monthly Index: 2020 Sees Capital Value Growth Decline 7.6%

According to the latest edition of the CBRE Monthly Index, commercial property capital values increased in December despite a steep decline over the year.

In December, capital values rose by 0.3%, representing the first-time values have increased at the all property level since October 2018. However, that enthusiasm was counter-balanced by the figures that show that capital value growth for the year was -7.6%.

There was a similar story for rental values in December as figures were flat at 0.0% – the first time in 10 months that a decrease has not been posted, while annual growth was at -2.5%.

CBRE UK Monthly Index Snapshot: December 2020

As shown in the image above, Industrials reported capital value growth of 2.7%. This impressive growth was the largest monthly increase for the sector in the history of the index.

Over Q4 2020, capital values increased 6.1%, a greater increase than the sector posted in all of 2019 – This impressive annual growth of 4.8% means that Industrials has been the strongest performing sector for five consecutive years.

CBRE UK Monthly Index Snapshot: 2020

While Industrials posted great numbers for the year, as shown above, other sectors continued to suffer overall losses across various metrics. Retail was unsurprisingly the largest sector casualty of 2020 with capital value growth of – 17.8%.

According to information by CBRE shared with Commercial People, Shopping Centres, reported falls in both capital and rental values of -30.0% and -13.6% respectively, making for the subsector’s weakest ever annual performance.

Highlighting the results for December and 2020, Toby Radcliffe, Analyst at CBRE UK said: “2020 was a year of remarkably different sectoral performance, reporting the greatest divergence between the strongest and weakest performing sectors in the index’s history (at 21.5 percentage points).

“Throughout the year the Retail and (to a lesser extent) Office sectors were challenged by the external pressures imposed by the Covid crisis. Meanwhile, the Industrial sector thrived. The sector responded to 2020’s challenging environment posting a strong annual performance including December’s record-breaking capital growth and total return.

“Consequently, 2020 ended on a positive note with all property capital value growth tentatively moving back into positive territory for the first time in over two years. However, with the UK starting 2021 in a third national lockdown the extent to which the industrial sector can continue to bolster the all property performance remains to be seen.”

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