Capital Values Decline Further: Occupier markets, which had remained firm since the onset of the credit crunch, forced All Property rental growth negative inMay for the first time since 2003.  This weakness was wholly attributable to Central London Offices, which recorded falls of 1.3%, their second consecutive monthly fall.

Despite a similar yield shift to last month, the decline in All Property capital values reaccelerated slightly in May to 1.0%, from -0.7% in April, on account of declining rental values.

In both April and May, Shops recorded flat total returns but poorer performance in Retail Warehouses pushed the monthly total return on All Retails to -0.5%.  Industrials recorded their strongest month since July, with a monthly return of just -0.1% in May.

UK Economy Continues to Weaken: Survey evidence suggests that the service sector contracted marginally in May and manufacturing flat lined.  Consumer confidence reached its lowest level since the early ’90s recession.

Most major Central Banks are re-orienting their policy responses as food and energy inflation soars but economic growth slows dramatically.

Benchmark gilts performed poorly in May as inflationary concerns caused markets to curb their expectations of further interest rate cuts.

CBRE UK Month Index PDF - June 08