The dramatic turnaround in UK commercial property performance in 2013 was reflected in a 12-month total return high of 2.1% in December.
According to the IPD, the December high was up by 170 basis points on the 0.4% total return reported in January 2013.
This comprised a 1.5% rise in property values – the highest level since March 2010 – enhanced by a return to overall rental value growth, rising by an average of 0.6% over the year.
The strong December pushed annual total returns into double digits with UK commercial real estate returning 10.9% in 2013 – the best annual performance since 2010.
The index, which measures more than 3,300 investment-grade assets valued at £34bn, reported an overall increase in property values of 3.8% in 2013, and income returns of 6.8%.
Comparatively, equities returned 18.5% for the year, and bonds -5.2%, and returned 1.6% and -1.8% respectively for the month of December.
In January 2013 only three regional UK markets recorded rising property values, out of a total of 30.
By December, only one market outside London recorded falling property values.
Despite this overall improvement, there remain divisions between property sectors, ?with setbacks in retail still dampening returns. While offices and industrials returned 14.4% and 14.2% respectively for the year, the return on retail was just 7.6%.
Retail returns remain ?at the mercy of lacklustre occupier demand and online competition. Capital values in the sector increased by just 0.8% over the year, and rents declined by 1.3%.
Comparatively, values for office property rose by 7.7%, and for industrial units by 5.9%, while rents increased in both sectors by 3.3% and 0.7% respectively.
