The office sector delivered the strongest quarterly returns for Q2 2012, according to the Jones Lang LaSalle Property Index.
The sector, which delivered returns of 1%, outperformed industrial at 0.3% and retail, which was flat, as foreign investors continued to target prime office stock.
Mike Penlington, director in Jones Lang LaSalle’s valuation advisory team, said: “The Jones Lang LaSalle Style Index highlights the continuing re-pricing of secondary assets relative to prime in light of poor economic prospects. We expect this polarisation to continue as caution in the investment market will lead to a focus on prime assets.”
The index also found that all property returns fell to 0.4% in Q2, compared with 0.7% in Q1, as capital values declined at their sharpest rate since 2009.
Annual returns for 2012 to date were 4.3%, down from 9.1% from the 2011 Q2 figure.
Equities were the weakest performing asset, as investors preferred the relative safety of gilts in light of the continued eurozone debt crisis. In 2012 Q2 returns were -2.6% compared with 6.0% for gilts and 0.4% for property.
All property rents were flat in Q2 as office rental growth was dragged down by falls in other sectors.
Jack.sidders@estatesgazette.com
