Over September, UK commercial property capital values declined by 0.3%, the third consecutive monthly fall, to produce a total quarterly decrease of 0.9%, according to the CBRE UK Monthly Index.
Rental values also fell by 0.2% during September, creating a total decline of 0.7% for the quarter, while total returns for Q3 were 0.6%.
Capital value growth for the retail sector was -2.9% for the third quarter, dragged down by shopping centres, which saw values plunge by 7.7% after a 4.1% slump in September.
Retail rental values also dropped by 2.1% for the quarter and total returns were -1.1% for the quarter.
Conversely, industrial capital values saw positive growth for each month in Q3, achieving a 1.1% increase in values buoyed by a 1.3% hike in the capital values of industrial assets in the South East. Rental value growth was 0.4% for the quarter. Industrial total returns for the quarter were 2.3%.
The office sector saw capital values drop by 0.5% over the quarter, with outer London and M25 offices the most resilient sub-sector, with zero capital value growth. Average office rental values fell by 0.4%. Total returns for the sector were 0.7%.
“Q3 has been the strongest of 2020,” said Toby Radcliffe, research analyst at CBRE. “It reported significantly smaller decreases in capital values at the all-property level than previous quarters, leading to positive quarterly total returns for the first time this year.
“On the current trajectory, it now looks possible that 2020 could end with greater total returns and smaller declines in rental and capital values for the year than predicted by the 2020 summer IPF consensus forecast.”