Investment into UK Property fell to a 7 year low in the second quarter; with the lack of transaction evidence resulting in a yield shift of just 20bp over the quarter, half the rate of Q1.  Compounding the yield impact, rental values actually fell in thesecond quarter compared to moderate growth in Q1.  Nonetheless, All Property capital values fell only 3.0% in Q2 compared to 4.5% in the previous three months.

Over the first half of the year, All Property values fell by 7.4% compared to 11.9% in the final 6 months of 2007.  In the last year, All Property rental values have grown by just 2.2% while total returns plummeted to -13.9%.

Although the pressure of forced sales from retail funds may haveeased, the debt environment remains challenging for commercial property. Results from the Q2 Bank of England Credit Conditions survey suggest that this will continue throughthe next few quarters.

Download the full CBRE index PDF:
CBRE UK Monthly Index - July 2008 PDF

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