Returns From UK Commercial Property Sector Continue Apace

by Carla Johnson, Investors Offshore.com

19 October 2004

Investment returns from the UK commercial property sector continued at a rapid pace in the twelve months to the end of September, although there are signs that the market may be slowing, according to recent reports.

In the year to the end of September, returns from the commercial property sector reached 17.1%, outstripping the 15.7% returns from UK equities in the same period, property fund benchmarker the Investment Property Databank reported.

IPD also indicated that total returns (a combination of capital gains and rental income) reached 1.7% during the month of September, whilst returns in the third quarter hit 4.3%. This was down slightly from a peak in quarterly returns of 5.1% in July.

However, experts fear that a number of factors may weigh on investment returns in the UK property sector in the months ahead, such as a preference by investors for European tax efficient REIT-style funds, and a general cooling in the UK economy brought about by the rising price of oil and higher interest rates.

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