UK property posted a total return of 2.7% in 2012, according to IPD’s Quarterly Index. Although ongoing yield expansion continued to erode capital values, property’s high income return more than offset this decline.
Whilst returns eased over the first six months of 2012, this trend was reversed in the second half of the year. Performance started to rebound from the third quarter, reflecting a deceleration in the pace of yield expansion and rental decline, with the latter in particular showing signs of stabilisation in the fourth quarter.
The office sector recorded the strongest return of the year of 4.1%, followed by industrials (2.9%) and, lastly, retail (1.5%). Despite the wide range in returns, all three sectors saw total returns strengthen over the second half of the year, in line with the improvement in the wider market.
Source : PRUPIM