Commercial property capital growth and rents grow marginally in July

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The latest CBRE monthly index shows that UK commercial property values increased by 0.4% during July 2017.

This increase was boosted by the higher performing industrial sector. Rents rose by an average of 0.1%.

In the retail sector, capital growth was 0.2% for July and office property rose by 0.3%. The highest growth in commercial property was the industrial sector, which grew 0.8% in July.

Miles Gibson, the head of property investment group CBRE, said:

“The slowing performance reported in July is not unusual for the first month of a quarter, especially following the strong performance of H1 2017. Continuing the 2017 trend so far, national averages were boosted by industrial property.”

Estate agents Savills reports that investment in commercial property rose by 1% in the first half of 2017. Richard Merryweather, head of their UK investment department, said that the commercial property market is in good health. He believes that investment growth would have been higher if there had not been a shortage of properties available for sale. Many investors are from outside Britain because the weak pound makes it cheaper for overseas buyers to invest in commercial property.

One factor that has helped investors is that commercial mortgage interest rates are low. Fixed rate loans are available at a little over 1%, but this rate will rise after a period of around two years. Rates vary as each individual loan application is individually risk assessed, with higher risk loans carrying a higher interest rate.

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