The Value of IPD Data
As a London-based property expert, Simon Morris uses his specialist knowledge of the commercial property sector, to advise UK property investment funds on how to use it to maximise profitability.
For Simon, the release of the latest commercial property figures from the IPD Monthly Property Index is telling, as it shows where funds can invest their resources to generate long-term revenue. As such, it’s important to note the growth recorded in the office sector.
Office Catches up With Industrial Returns
According to Property magazine, the commercial sector as a whole performed admirably in September, recording returns of 1.7% – up from 1.4% in August. Furthermore capital values soared by 1.2%, meaning they have now recorded 14 months of consecutive growth.
When it came to individual elements of the commercial market, offices caught up with industrials in terms of growth, both returning 1.9%. Returns for retail meanwhile, lagged at 1.4%, consistent with trends since the beginning of the commercial property recovery, spurred in May 2013. Capital values meanwhile, measured 1.4% for offices, 1.3% for industrials and 0.9% for retail.
The Regional Break Down
Regionally though, retail performed more handsomely; shops in central London were the strongest regional market, returning 3.6%, and further showing the value of carefully investing in London markets.
South East and outer London offices were also major winners according to IPD’s September data, recording return volumes of 2.6% and 2.4% respectively. They also saw the strongest rental growth rates, at 1.2% and 1.0% each. As far as industrials go, London also proved lucrative in this sector last month, with London industrials returning 2.3%.
Where to Invest
In Simon Morris’ opinion, this data shows where UK property funds should be investing, based on their long-term aspirations. If you want to generate an effective long-term revenue stream, then investing in office or retail space in London could be the way to go.