uk commercial property up most in nine years

UK commercial property up most in nine years -CBRE
Wednesday December 09, 2009 12:54:17 AM GMT


PROPERTY/CBRE
* Values rise 2.7 percent, most since Dec 2000

* Rents continue to weaken, may stall recovery


LONDON, Dec 7 (Reuters) - British commercial property values in November made the biggest monthly gain since records began nine years ago, rising 2.7 percent and marking the fifth consecutive monthly increase, the latest CB Richard Ellis Monthly Index found.

Values have been rising steadily since July when they were down 44 percent from the last peak reached in mid-2007.

The growth in November was led by retail warehouses and shopping centres, up 4 percent and 3.9 percent respectively, boosting total returns -- comprising rental income and capital growth -- to a record 3.4 percent, consultant CBRE said.

"The strength and depth of current investor demand seems destined to lead to a continuation of the very strong returns seen in recent months into next year," David Wylie, head of Economics and Forecasting at CBRE, said.

"However, the prospect of more significant increases in supply coming through, and the generally weak rental growth outlook, may act as a brake on the strength of the recent recovery," he said.

Average rental values continued to fall, down 0.3 percent in November albeit at a slower pace than the previous month, and are 9.3 percent lower compared with a year ago, CBRE said.

A rising chorus of investors have warned of a short-lived recovery for Britain's commercial property market, Europe's second-largest after Germany, if values rise too quickly without growth in the economy and rents. [ID:nLA705280][ID:nL4211729] (Reporting by Daryl Loo; Editing by Greg Mahlich)