Property outperforms as equity slumps
Property is now the best performing UK asset class over both one year and three years following the slump in equity markets in 2000, according to property specialist Investment Property Databank’s (IPD) annual figures.
In the three years to the end of 2000, UK property returns averaged 12.2% compared to 9.8% for equities and 9.6% for gilts. As a sector, UK pension funds recorded property returns of 10.3% for the year and accounted for 23% of the whole property market.
IPD’s figures are based on 13,260 UK properties valued at £97.4bn (€153bn). The report describes the performance of commercial property in 2000 as “solid, if unspectacular.”
Net real-estate investment flows for the year also reached record proportions at £5.7bn. In relative terms, net inflow last year was equal to 6% of mid-year capital value, almost double the level achieved in 1999.
The increase reflects a 21% rise in purchases to £10.1bn and a 9% drop in sales to £7.7bn.
Last year also saw a major switch in net investment from retail property to office space. Office space accounted for 46% of investments, with most going into Outer London and Southern England.
The proportion attributed to retail property fell to 32% from 61% in 1999, as investors sought to cut their exposure to shops and shopping centres, the report says. Industrials retained their market share at 17%.