City of London office capital values drop 6.1 percent in July - CBRE

Office lights are on in banks as dawn breaks behind the financial district of Canary Wharf, in London, Britain June 24, 2016. REUTERS/Neil Hall

LONDON (Reuters) - Capital values for offices in the City of London dropped 6.1 percent in July from a month earlier, in the aftermath of Britain's vote to leave the European Union, real estate firm CBRE CBG.N said on Monday.

Capital values for offices in central London and the rest of the UK dropped by 4.1 percent and values for all UK commercial property dropped 3.3 percent, taking year-on-year growth to 0.4 percent, CBRE said in its monthly UK commercial property index.

Capital value refers to the probable price that would have been paid for a property at the date of valuation.

“Capital value growth was always expected to falter at some point during 2016, as global economic uncertainty cast doubt on ... strong growth seen in previous years persisting for much longer,” Miles Gibson, Head of Research at CBRE UK, said in a statement.

“The Brexit vote has now crystallised that expectation, though it is not the only driver of it.”

Several asset managers suspended UK commercial property funds last month, after the Brexit vote led panicked retail investors to withdraw funds from this illiquid asset class.

Other fund managers cut the value of their funds, though some have since reversed part of that cut in value.

Commercial rental value growth dipped to zero in July from 0.2 percent in June, CBRE said.

Reporting by Carolyn Cohn and Simon Jessop, editing by David Evans