Commercially-owned residential property in the UK generated higher returns than any other European or North American market in 2013, according to new research from IPD.
UK residential returned 14.7% last year, outperforming countries with a larger and better-established private rented sector and multifamily markets. The US residential market returned 9.7%, Germany returned 8.3% and the Nordic countries 7.4%.
Residential property in the UK has shown fairly consistent performance over the past five years, with returns averaging 11.2% per year. This compares with 6.8% in Germany for the same period.
The number of households renting in the UK has doubled in the past decade to four million, according to government figures, and the private rented sector has now overtaken social housing by volume.
Despite the small size of the UK’s institutional-grade PRS market, rising demand and a shortage of stock have boosted returns across the sector.
The research was based on the IPD Multinational Property Index, which measures the performance of more than £100bn of assets in 10 major private rented markets across the world.
