The 12-month rolling IPD All Property total return increased every month over February to May 2013. This was due to a fall in negative yield impact - i.e. yields have continued to rise, but at a slower rate.
There continues to be robust investment demand in central London, with overseas investors dominating purchasing activity. But recently there has been more investor confidence, and greater depth and liquidity to markets more widely across the UK. Many domestic funds that have been priced out of London are turning to the regions in search of superior yields on assets with broadly the same covenant strength.
At the secondary end of the market, property companies and opportunity funds still have limited access to debt. However the larger, more established operators have been raising finance through shares and bond issuance to target lot sizes of £5m and greater. The smaller players with restricted access to funds are still struggling.
All Property total return is expected to reach 5.2% in 2013, with a 0.8% fall in capital values.
Source : DTZ (Groupe UGL)