UK index with long history
The LaSalle Investment Management UK Property Index was launched in 1978 and offers over 30 years of continuous performance data, one of the longest regularly published series of property returns data in the world.
It tracks the performance of a structured sample portfolio currently comprising 182 actual properties with a total capital value of approximately £540m (e864m) as at September 1999. Total returns, capital growth, rental value growth and income growth have all been reported quarterly since 1977.
The purpose of the index is to give a regularly updated indication to investors of the performance of property investments as compared to other investment media. It is also helpful where evidence is in short supply and some indication is required of likely rental and/or capital growth over a period. In particular, we find that the quarterly review of values is useful for interpolating trends between annual valuations.
The index is intended as a yardstick of performance of the property market and comparison of property with established indices of alternative investment media, eg equities and gilts. The properties in the Index are valued quarterly by Jones Lang LaSalle for institutional investors, as opposed to development companies or private owners, and, as such, the portfolio tends to represent the (unleveraged) returns obtained by this type of investor.
While we cannot claim to replicate the performance of the property investment market as a whole, studies made by ourselves and others do show a broad measure of agreement between the LaSalle Investment Management Index and other UK property benchmarks. Our Index has a good track record for predicting the IPD Annual Index property return – the most important UK benchmark – and this is important given that this latter ‘number’ is not known for two months after the year end.
The success of the IPD indices makes some people question the usefulness of other market measures. We will continue to produce the LaSalle Investment Management Index and ensure the sample remains as representative of the institutional market as possible. The UK is fortunate to have so many property indices with significant histories. They are an asset in their own right and add to the UK market’s transparency.
Robin Goodchild is director of European research at LaSalle Investment Management in London