FINANCE: UK commercial property returned 4.4% in the third quarter, slightly down from the 4.7% achieved in the three months to the end of June, according to the IPD UK Quarterly Property Index.
Capital growth cooled to 3%, down from the 3.3% seen in the second quarter.
The 12-month return for the end of September rose to 18.3%, compared with 16.4% at the end of June.
Industrials maintained their lead as the highest-returning sector at 5.4%, followed by offices at 5.1%. Capital values of both offices and industrials rose by 3.9%.
Retail was the weakest performer with a 3.7% total return, and was the sector that showed the greatest decline in performance over the quarter out of all of the sectors, having returned 4.3% in Q2.
Phil Tily, executive director and head of UK and Ireland, said: “The latest IPD quarterly figures show that UK commercial real estate continues to be buoyed by strong investor demand, reflecting the country’s positive economic outlook at present compared to many other parts of the world, as well as the transparency and liquidity of the UK property market.
“The performance of London real estate across all three sectors stands out once again in Q3, with the strength of the capital’s retailing and its office occupier demand driving returns. Meanwhile many UK regions, even if looking slightly more subdued than in Q2, are still sharing in the overall picture of solid rental markets and rising values”
Property outperformed both bonds and equities, which returned 2.9% and -0.9% respectively.
