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Commercial property investment in the UK has opened up an historic 440 basis-point yield spread over government bonds, according to the CB Richard Ellis Monthly Index for November.

The All Property equivalent yield at the end of November was 8.2% compared with 3.8% on gilts as the fall in real estate values accelerated for the second consecutive month.

CBRE said that the positive gap looked set to widen further in the near term with gilt yields dipping after the latest cut in UK base interest rates to a 57-year low of 2%.

Head of UK Research Peter Damesick commented: 'On any normal measure of relative pricing, property is now flashing a strong value signal that could become even stronger in the New Year. In a debt constrained market, cash-rich investors have the field and 2009 looks set to offer exceptional buying opportunities.'

The CB Richard Ellis Monthly Index showed that All property capital values in November fell by 6.6% following a 4.6% drop in October. Property values were down 23% in the year to date and are now 32.2% below their peak in mid-2007. All Property rental values declined by 1.1% in November, taking the year to date fall to 1.6%.

CB Richard Ellis said the recent 1% cut in UK interest rates would be beneficial, but warned that the economy, and occupier markets for property, would remain on a weakening trend in the near term.

Damesick said: 'Some medical conditions require a lengthy course of treatment to show improvements. The chronically congested state of UK credit markets has seen little if any relief as yet from lower interest rates. The Bank of England has upped the dose again but it will be some months before the patient experiences real relief from discomfort. Further increased doses are likely to be needed to unblock the system.'