The Continued Ascent; Traditional Property Drivers: September, 2014
The latest IPD figures show a slight moderation in returns, which may be symptomatic of the traditional summer slowdown. Commercial property values in the UK rose by 0.9% in August, slightly less than the 1.1% growth seen in July. In addition, the monthly rise in values fell back below 1% for the first time since April 2014; but the recovery that began in May 2013 is still continuing, albeit at a moderating pace.
UK commercial real estate returned 1.4% for the month, with income return standing at 0.5%. This compared unfavourably with the performance of other asset classes in August, with bonds returning 2.8% and equities 2.0% (JP Morgan 7-10 year/MSCI UK). This was the first month in which both bonds and equities have outperformed UK commercial real estate since July 2013.