RENT paid on retail property fell month-on-month for the first time in seven years in July, while rents on offices continued a four-month slide, according to a new report yesterday.
According to the CB Richard Ellis UK monthly index, UK high street shop rents, on average, fell 0.3 per cent in July as raging inflation kept people out of the shops in droves.
Rents on offices fell 0.6 per cent, although the UK average was weigh
ed down by falls in central London. Office rents outside London and in Scotland "are yet to turn negative".
Stewart Taylor, director in business space for CBRE, said rents in Scotland may not fall as far as they have in London and other parts of the UK. Not only is the amount of available property lower, development, particularly in Edinburgh, is often constricted by the planning process.
He said: "In any cycle in property, the highs and lows in Scotland tend to be not as high and not as low as London. Rents there race ahead and they see much stronger growth when the market is on the up. In Scotland you never see rents racing ahead, they tend to be more gentle. The upside is when the market quietens you don't get the same depths of troughs."
The overall commercial property slump marks a nationwide trend in demand for commercial property. According to CBRE, property is now the weakest performing asset class for investors, with a 15 per cent-plus drop in returns compared to a 13 per cent slump in equities and a 7 per cent rise in benchmark gilts.
Overall commercial property values in the UK continued to decline, falling 1.9 per cent in July – the largest decline since January. Over the year, commercial property has "corrected" 9.2 per cent.
Taylor added: "There is no question capital values have fallen and will probably continue to fall.
"But it is like the residential sector. People bleat about falling values and forget we had a very sustained period of growth for quite some time. People have done well and this is a market adjusting itself."
The full article contains 366 words and appears in The Scotsman newspaper.
