Third quarter returns in the UK are offering encouraging numbers for investors, according to the latest report released by Jones Lang LaSalle. Returns were in the black by a rate of 1.3 per cent, compared to 0.4 per cent in the second quarter. Analysts noted that growth in the UK was not equal in primary and secondary markets.
Prime commercial markets were responsible for generating growth at the rate of 6.4 per cent in the quarter, while secondary markets were down 0.8 per cent in the same period. Retail properties were the strongest performers in the quarter, followed by office space and warehousing. Industrial property came in last.
These figures represent the largest quarterly increase since the fourth quarter of last year. The news isn’t all that encouraging for investors, since annual returns for the year to date have been lagging behind previous years. They are sitting at 3.8 per cent, compared to 8.4 per cent at the same time last year.
Investors who want to make the most of the current market conditions will need to choose their stock carefully. The best potential for growth will be found in prime markets, and the divide is likely to continue going forward.
Capital growth was stuck in the negative range at -2.9 per cent, and it continued to decline for the fourth consecutive quarter. The rate of decline (-0.5 per cent) was less than the previous quarter, which was 1.3 per cent.
Retail properties saw the strongest returns in any sector, with returns of 1.3 per cent for properties in prime locations. Investors who put their money into offices saw returns of 1.2 per cent. Industrial properties came in at just over the break-even point at one per cent.
Property rental growth was limited to 0.4 per cent over the quarter. Retail did improve somewhat, but the offices sector was the one that was responsible for the majority of the contribution to this figure.
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