by Brianna Crandall — March 7, 2014—Retail properties showed the strongest growth in capital values and rents of all property types worldwide in the fourth quarter (Q4) of 2013, according to global property advisor CBRE Group. CBRE’s analysis for the quarter and the year appear below, and in greater detail in the group’s Global Rent and Capital Value Indices MarketView | Q4 2013 .
CBRE Global Capital Value Indices
- The CBRE global capital value indices showed gains on both a quarterly and annual basis for all property types. The indices highlight the fact that capital flows—rather than market fundamentals—remained the main growth driver for commercial real estate. This trend has been in place for several years as commercial real estate’s earning multiple has risen faster than property earnings.
- The CBRE Global Retail Capital Value Index showed the strongest growth among property types, rising 8.2% during the year. During 2013, the Global Industrial Capital Value Index rose 6.0%, and the Global Office Capital Value Index rose 4.7%.
- The Global Industrial Capital Value Index recovered to its pre-recession level during Q4 2013. This was largely due to the stronger growth of the Americas and Europe-Middle East-Africa (EMEA) Industrial Capital Value Indices during the year.
- Regional capital office values rose most strongly in the Americas, which saw growth of 7.1% on an annual basis.
CBRE Global Rent Indices
- The CBRE Global Retail Rent Index fared best, rising 4.5% during the year. Rising retail rents reflect limited space availability and increased demand from retailers who need to position their shops and are attracted to prime space.
- Industrial rents rose 2.8%, and office rents improved 1.2% during the year.
- In the office sector, the Americas, dominated by U.S. markets, posted the strongest rent growth, at 2.4% during 2013 and 1.4% quarter-over-quarter. A contributing factor in this growth has been the historically low levels of new office construction.
- By comparison, the Asia Pacific and EMEA Office Indices posted sub-1% growth on both an annual and quarterly basis. The disparity in regional performance was largely due to underlying local supply-demand trends.
“Real estate values continued to appreciate across all property types and geographies during 2013, as sustained investor demand for commercial property fueled further yield compression, driving up capital values—even in the face of higher interest rates,” said Dr. Raymond Torto, Global Chairman, CBRE Research. “As we look toward 2014, real estate values are expected to continue to rise across all three regions as capital continues to flow into the commercial real estate sector. Rents will likely grow at a faster pace, in line with improving economic and real estate market fundamentals in many key markets.”
