Friday, May 19, 2023
IPD reports UK commercial property returns 1.4% in April
IPD has reported that the total return on UK commercial property was 1.4% in April 2006, adding to the first quarter's strong 4.4% return. Still, April's figure slipped slightly when compared with March's all property total return of 2%.
This performance propelled property ahead of both equities and gilts over 30 days, although property slips to second place against equities when measured from the start of the year. Equities in April earned investors 1.1% while gilts returned -1.2%. Since the start of the year, property has earned investors 6%, Equities 9.2% and bonds -2.2%.
Capital value growth for commercial property during April was 1.0%, down from 1.6% in March. It was again fuelled by a downward shift in yields. In April, the all property equivalent yield fell by 5 basis points on a consistent sample basis. Meanwhile, all property rental values rose modestly, increasing by 0.2% in April.
The office sector continued to out-perform the other sectors for the fourth consecutive month, with a total return of 1.8% in April, down from March's 2.5%. Industrials overtook retails, returning 1.5%, albeit down from 1.7% a month earlier, while retails earned investors 1.3%, down from 1.9% in March. All three sectors saw equivalent yields fall on a consistent sample basis last month; offices by 7 basis points, followed by retail and industrials with declines of 5 basis points.
Co-founder of IPD, Dr Ian Cullen said: "The market is still being driven forward by yield compression, to the point where there is now virtually no margin between spot yields on property and those on gilts 4.9% versus 4.6%. Exciting times"
This performance propelled property ahead of both equities and gilts over 30 days, although property slips to second place against equities when measured from the start of the year. Equities in April earned investors 1.1% while gilts returned -1.2%. Since the start of the year, property has earned investors 6%, Equities 9.2% and bonds -2.2%.
Capital value growth for commercial property during April was 1.0%, down from 1.6% in March. It was again fuelled by a downward shift in yields. In April, the all property equivalent yield fell by 5 basis points on a consistent sample basis. Meanwhile, all property rental values rose modestly, increasing by 0.2% in April.
The office sector continued to out-perform the other sectors for the fourth consecutive month, with a total return of 1.8% in April, down from March's 2.5%. Industrials overtook retails, returning 1.5%, albeit down from 1.7% a month earlier, while retails earned investors 1.3%, down from 1.9% in March. All three sectors saw equivalent yields fall on a consistent sample basis last month; offices by 7 basis points, followed by retail and industrials with declines of 5 basis points.
Co-founder of IPD, Dr Ian Cullen said: "The market is still being driven forward by yield compression, to the point where there is now virtually no margin between spot yields on property and those on gilts 4.9% versus 4.6%. Exciting times"
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