Investment Property Databank (IPD) reports that yields for UK commercial property have fallen to their lowest level in 14 years.
Initial yields in both August and September were 6.1% compared with 6.6% a year earlier, a level not seen since 1990. Equivalent yield was at 7.1% in September, the lowest figures since IPD data began in 1987.
Total returns from UK commercial property for the year to September were 17.1%, making it the best-performing asset class. But 9.7% of this was capital growth, compared with 7.4% of income return. CB Richard Ellis forecasts average total returns of 8% or 9% for the next three years, with many buyers pinning their hopes on an uplift in the rental market.
References: Financial Times 19/10/04 page 22
