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Special Report

Impact investing


Specialists set the pace in UK property

Pension fund investors in UK property obtained total returns of 12.9% in 1998, putting them well ahead of the life insurance funds, but trailing the 14% obtained on average by specialist investors, which includes limited property partnerships. Ac-cording to the London-based Investment Property Databank, the overall return achieved by all funds came to 12.1%.
Last year was a very active time for pension funds, with 18% of fund values being turned over in 1998, compared with an average of around 15%, for the past decade. This was slightly less than for the the IPD universe, covering 13,900 properties, with a value of £75bn. IPD comments that “turnover was at a high level and the the stamp duty screw of 5% had not dampened activity”.
Pension fund net new investment at roughly 5% of fund value was well above the less than 2% average of the previous 10 years, but at a lower fund proportion than for the other classes of investor, with the ‘short term’ category consisting of unitised property funds.
Pension funds make up around a quarter of IPD’s database and over the last 10 years have been out performed only by the specialist invest-ors. In IPD’s view the specialist funds and other categories have shown a consistency of performance, having shaken off the overhang of the late 1980s.
Commenting overall on UK property market trends in 1998, IPD says that “respectable annual returns mask a weak second half”. The figures show that rental growth peaked early on in 1998, when there was a rapid deceleration in rental growth in the second half of the year. It was a year of a small range in returns as between the office retail and industrial sectors, says IPD.
IPD says that estimates made about the total property stock in the UK, put at about £300bn, of which the proportion available for investment amounts to £150bn. Fennell Betson

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