2010 was a remarkable year for the UK commercial property market with the IPD Quarterly Index delivering a total return of 15.2% over the 12-month period. This marked the strongest calendar year performance since 2006. Yield impact drove this return. Yields fell considerably in the first half of the year, although the level of yield compression weakened to a standstill during the following six months: the UK All Property equivalent yield ended the year at 7.36%, only 16 basis points lower than its level in June 2010. The last quarter of 2010 also saw All Property rental growth rise to an encouraging 0.1%. This positive figure represented a balance between the weak occupational market, where rental growth remained negative, and the strong bounceback from selective markets such as retail warehouses, and especially Central London offices and retail.
Source : M&G Real Estate