In November 2013, all of the major IPD property sectors showed a further sharp upturn in annual capital growth and total return. Industrial annual return increased to 12.05% and took over as the best-performing major sector.
The last time industrial outperformed the other sectors was between May 2008 and December 2009. However in this instance it was because it was the sector with the least negative returns.
This positive outperformance is effectively unprecedented. One notable current factor is that industrial yield impact outside of the South East has been positive for the last three months, whereas for office it is still negative.
Quarterly IPD data showed that secondary yields moved in for the first time in two years in Q3 2013. The strongest positive secondary yield impact since 2010 turned secondary capital growth positive again.
All-property total return is expected to have risen to 11.1% in 2013. Furthermore, strengthening occupier markets and a continued low interest rate environment in 2014 point to another year of double-digit total returns.
Industrials are expected to have been the strongest performer in 2013, with offices achieving a similar magnitude. Offices are expected to remain strong in 2015, driven by stronger rental growth than the other sectors. Retails are forecast to continue to lag the other sectors.
Source : DTZ (Groupe UGL)