A slump in the retail sector has dragged down capital values in UK real estate in the first quarter of 2019, according to CBRE's latest monthly index.
Retail assets decreased in value by 1.2% in the month of March and 2.8% since the turn of the year, the adviser reported. Rental values also shrank by 0.4% in the month and 0.9% for the quarter.
Retail was the only sector to experience negative growth, but it was enough to reduce capital values in the market as a whole by 0.2% for the month and 0.6% for the quarter.
Industrial assets showed the strongest growth for the quarter of 1.9%, with offices posting a 0.8% increase in March. It was the first time in 21 months that logistics was not the best performer among the major sectors. Almost all the industrial growth was concentrated in the south-east region, where capital values increased by 1.2% compared to 0.1% for the rest of the UK.
Central London offices also performed better, growing by 0.7%, while the rate for other sectors was 0.5%.
The UK retail sector has been hit hardest by the emergence of e-commerce, with major high street names such as Debenhams and House of Fraser closing stores or using Company Voluntary Arrangements (CVA) to force landlords to revise their rental terms. As PropertyEU reported in November, analysts believe other digitally advanced markets such as the Netherlands and Germany could see similar distress in the near term.
E-commerce accounts for 17% of all sales in the UK, while the compact, well connected Benelux region has reached 11% and already seen major chains like V&D and Intertoys go under.
Robin Honeyman, senior research analyst at CBRE UK, said: 'Results for the first quarter of 2019 mirror the trends reported so far this year and throughout 2018.
'The office and industrial sectors have maintained a steady course compared with the turbulence experienced in the retail sector. Overall, results for Q1 2019 were less positive that those reported for the same period in 2018.'