Commercial property values in the UK grew by +1.4% in February 2010 after a slower than expected start to 2010 in January when they only increased by +0.9%, according to CB Richard Ellis (CBRE).

All-property returns were 2% in February giving annual returns of 13.6%, however rental values fell by -0.2% and yields by -0.1%.

Nick Parker, economics and forecasting analyst at CBRE, said: “The general sentiment in the market currently is that property is approaching fair value, with ongoing yield compression expected in the short term. Whilst it was prime yields that came back in most aggressively in the latter half of last year, it is the better secondary markets that are slowly starting to attract interest at the beginning of 2010, with investors beginning to look further up the risk curve in a hunt for better returns. It is widely expected that the yield gap between prime and secondary property will slowly narrow over 2010 as competition for good secondary assets becomes more heated.”

In February, central London offices were the best performers again giving total returns of 2.6% and capital growth of 2.1%. Shopping centres also performed strongly producing a total return of 2.4% with capital growth of 1.8% as, according to CBRE, they are finally catching up after a very weak 2009.