Tuesday, April 25, 2023
UK Commercial property returns almost double in first quarter
Total returns on UK Commercial property were 2.0% in March 2006, contributing to a very strong 4.4% return for the first quarter of 2006-almost double that achieved in the first quarter of 2005 when returns were 2.7%.
This strong performance put property in second place against the other asset classes, out-performing gilts but failing to beat the 8.1% quarterly return achieved by equities. However over the long term (5 and 10 years), property remains the top performing asset.
Capital value growth over the whole of the first quarter was 3.1%. All property rental values were steady over the quarter, increasing by 0.7%. Accordingly capital growth was again fuelled by a sharp downward shift in yields. In March alone all property yield fell by 8 basis points, increasing capital values by 1.4% for the month.
The office sector out-performed for the third consecutive month, with a total return in the first quarter of 5.4% followed by retails at 4.2% and industrial at 4.0%. All three sectors saw yields fall sharply in March; offices by 10 basis points and retail and industrials by 8 basis points. For the first time since 2000 offices saw the strongest growth in rental values, of 0.5% compared with 0.2% in the retail sector and 0.1% for industrials.
The Monthly Index covers around £40bn worth of property. IPD's new Quarterly Index covering well over £70bn of property will be launched in May 2006.
This strong performance put property in second place against the other asset classes, out-performing gilts but failing to beat the 8.1% quarterly return achieved by equities. However over the long term (5 and 10 years), property remains the top performing asset.
Capital value growth over the whole of the first quarter was 3.1%. All property rental values were steady over the quarter, increasing by 0.7%. Accordingly capital growth was again fuelled by a sharp downward shift in yields. In March alone all property yield fell by 8 basis points, increasing capital values by 1.4% for the month.
The office sector out-performed for the third consecutive month, with a total return in the first quarter of 5.4% followed by retails at 4.2% and industrial at 4.0%. All three sectors saw yields fall sharply in March; offices by 10 basis points and retail and industrials by 8 basis points. For the first time since 2000 offices saw the strongest growth in rental values, of 0.5% compared with 0.2% in the retail sector and 0.1% for industrials.
The Monthly Index covers around £40bn worth of property. IPD's new Quarterly Index covering well over £70bn of property will be launched in May 2006.
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