RETURNS on UK commercial property investments rose 3.4% in November, and the figure has now moved into positive territory for the year.

The CB Richard Ellis (CBRE) Monthly Index also saw a rise in capital values during the month of 2.7%

The 3.4% return marked the strongest month yet seen in the history of the CBRE survey, with total returns over the year now standing at 0.1%.

The November return surpassed last month’s 2.7%, previously the strongest monthly total return.

However, rental values are continuing to fall, albeit at a slower rate than last month, falling 0.3% in November, and are down 9.3% annually.

“All Property” capital values rose by 2.7% over the month, with retail warehouses and shopping centres leading the way, with increases of 4% and 3.9% respectively.

Central London offices also saw further strong performance, with capital values up 2.7%.

David Wylie, head of economics and forecasting at CBRE, said: “The turnaround in investor demand since the mid-year has seen a surge in the performance of commercial property, with year to date total returns now positive at 0.1%.

“The strength and depth of current investor demand seems destined to lead to a continuation of the very strong returns seen in recent months into next year.

“However, the prospect of more significant increases in supply coming through, and the generally weak rental growth outlook, may act as a brake on the strength of the recent recovery.”

Despite the better returns being enjoyed by investors, another commercial property expert is warning there is still a fine line between a new boom or a second bust.

Jonathan Thompson, global head of real estate at accountants KPMG, said: “I think some people have gone into UK real estate not quite understanding the risk that they may not see a real capital gain for some time.

“Ten years down the line, those putting money in now might be very happy they did so, but, two years over the horizon, we might find ourselves in a position not wholly unlike the one we're in now.”

Fears of free-falling commercial real estate values have been replaced by worries of a pricing bubble in the UK, after floods of yield-chasing buyers triggered the 2.7% rise in capital values.