UK – Total returns on property for the year 2000 came out at 8.1% - below expectations but well above the negative figures recorded for UK equities, according to figures from the Insignia Richard Ellis All Property index.
Only UK bonds pipped the property figures, with real-estate eclipsing both overseas equities and cash.
Helen Paine, research analyst at Insignia Richard Ellis, comments: “Despite returns ending the year below expectations, property outperformed equities. We expect rental growth to slow over the next two years, but property returns to stay close to 10% p.a.”
The monthly index shows that December was a particularly damp month for property with capital values falling by 0.3% a third of the annual drop of 0.9%.
All Property annual rental growth slipped back to 6.9% due to weaker rental growth in the London office market.
Disappointingly, high street shops ended the year with an annual return of just 2.3% - their lowest since February 1996. Annual capital growth for the sector fell to –4.1% after eight consecutive negative months due to the outward movement of retail yields.
Industrials once again proved a sound performer, topping the sector with an annual rate of return of 14.3%, ahead of offices on 11.3%. Capital growth for both sectors, however, slowed year-on-year.