Commercial Property in the UK Gave More Returns Than Bonds and Stocks

The IPD UK Monthly Property Indexhas revealed latest figures of UK’s real estate market which showed that the returns from commercial property in the country were more than stocks and bonds during March. The latest data of IPD also unveiled that this was not the first month of 2014 in which the real estate has showed its strength, as the sector has performed well throughout the first quarter of the year. According to IPD’s index, the real estate market gave a total return of 1.6 percent during March as compared to bonds 0.1 percent gain and stocks 20.7 percent fall during the last month. 

Along with the returns, the value of the commercial property in the UK has also increased, as it showed a gain of 1 percent in the previous month, which reflects the growth that real estate sector of the country, has seen in January and February 2014. In contrast, return on income during the first two months was recorded at 0.5 percent. On the whole, 6.8 percent of increase was observed in the value of UK’s properties during the last 10 months. 

Talking about commercial real estate market of the UK, IPD’s head of Ireland and United Kingdom, Phil Tily said that the commercial property market of the country is giving the indications of growth and recovery, as March has so far remained the strongest month of this year. Similar is the case with student properties in Headingley therefore, students and professionals are acquiring the service of Oasis Properties that is an expert in finding an perfect space on rent. 

The capital growth in office and industrial sectors also helped them to post encouraging returns of 1.9 percent and 2.2 percent respectively. On the other hand, the retail sector that was earlier little sluggishin growth has also shown a decent return of 1.1 percent with a capital growth of 0.6 percent. The performance of rental sector was also positive during March, as commercial rent surged up by 0.1 percent but still it was not too impressive like other sectors. 

Retail sector, however, failed to show any increase in rental value due to poor occupier demand as a result the rents remained on the same level.Nevertheless, Guy Glover manager of F&C UK Property anticipates that the commercial property in the UK will be able to achieve double-digit returns during this year because shortage of new buildings has increased the demand for such properties. 

Shedding more light on UK’s real estate, Glover said that property is still more attractive as compared to other assets, as the real estate is giving consistent returns. He also said that the fundamentals are getting better too and their prediction is that UK’s real estate will do well in the next five years. 

Guy said that they expect that real estate will give stable returns of over 5 percent per year in the next five-year period, whereas rental and capital growth is likely to touch 9 percent per year mark. The F&C UK Property manager also mentioned that capital values will also increase slowly, as still they are about 30 percent less than the 2007 rates.