Capital values fell by 3.3% in July as the UK’s vote to leave the
EU hit investor confidence, according to the latest CBRE Monthly Index.
The monthly fall in values pulled year-on-year growth drown to
0.4%. It is the first significant drop in values recorded this year - in June
values actually edged up 0.1% month-on-month in spite of the EU referendum
happening at the end of the month.
The City of London office market was hit the hardest in July, with
capital values dropping by 6.1%.
However, capital values across the central London market fell by
only 4.1%, in line with the office sector across the UK.
Retail property values dropped by 3.6%, while industrial property
was the best performing sector, falling only 2.2%.
Miles Gibson, head of research at CBRE UK, said: “Capital value
growth was always expected to falter at some point during 2016, as global
economic uncertainty cast doubt on the likelihood of the strong growth seen in
previous years persisting for much longer. The Brexit vote has now crystallised
that expectation, though it is not the only driver of it.
Rental values held steady with growth dipping to zero from 0.2%
last month. In the industrial, growth of 0.1% was achieved.
“It’s reassuring to see rental values have held firm in the face
of this heightened uncertainty, a positive sign that the UK occupier market
remains strong, sustained by record levels of employment, and low borrowing
costs,” said Gibson.