January 2012
After months of a flat and directionless market, change may finally be in the offing for UK commercial property. Data released in December showed capital values fell in November – albeit by a very marginal 0.02% – for the first time since July 2009. It has taken a while for the concerns that have weighed on other asset classes to filter through to property, but the prolonged eurozone crisis, the weak economy, high inflation and sluggish consumer spending may finally be taking their toll.
Overall, offices have been the best performing sector in 2011; returns have been almost entirely driven by a buoyant City and West End market, where a lack of supply and consistent demand from financial services have sustained the market. Retail has been the weakest performer this year, as consumers and businesses have become increasingly cautious. Central London retail has been the exception to this trend, outperforming even central London offices since the middle of the year.
