asset class trumps uk equities and bonds as top performer over the 12 months to june 2003
Property has reclaimed its position over UK equities and bonds as the top performing asset class over the 12 months to June 2003.
According to figures in Jones Lang LaSalle's (JLLS) Property index for the end of the second quarter of this year, annual property returns fell to 10.2% but nevertheless outperformed equities, long-dated gilts and index-linked gilts over the period.
However, although returns on all UK property improved over the second quarter of 2003 from 1.8% in the preceding three months to 2.5%, this was still well down on the FTSE All-Share, which returned 14.5%, the highest quarterly performance in the equities market since 1999, the report said.
The report also highlighted weak performance in the office sector, with annual returns at 3.3%, their lowest level in 10 years.
Rents have declined by 7.5% over the quarter and by 13.9% over the year to June 2003. Latest forecasts by JLLS suggest rental growth in the sector will turn positive by 2005, although there will be large regional variations.
The retail sector is producing annual returns of 16.2%, the report said, compared with 10.9% for industrials and just 3.6% for offices.
The second quarter 2003 Central London office market report, also published by JLLS, shows the City and Docklands markets continuing to exhibit steadily rising vacancy rates. These increased from 10.9% to 12.6% in the City and 12% to 14.8% in Docklands during the past three months. The overall Central London vacancy rate is just short of 10%, the report said.
There were £1.72bn worth of transactions in the second quarter, with around a third of purchases by private investors.
Low interest rates remain the key to strong demand from private investors, acting individually and through pooled investment schemes, JLLS noted.
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