Figures from IPD show that UK commercial property returns surged in September, following a lacklustre August, showing Simon Morris the value of this sector for UK property investment funds.
The Long-Term Viability of Commercial Property
Simon Morris is a London-based independent property specialist, with a focus on commercial and residential property. Simon uses his expertise to advise UK property investment funds on how to maximise returns for their property portfolios.
This is why it is so important that figures from the IPD UK Monthly Property Index have shown a surge for the commercial sector. These figures indicate the long-term viability of commercial property investment for UK property investment funds.
Commercial Returns 1.7% for September
According to Property Magazine, the figures showed that returns for the sector rose from 1.4% in August to 1.7% in September. This prompted a 1.2% increase in capital values, meaning they have risen by 14.1% over 17 consecutive months. Income in September meanwhile, stayed stable at 0.5%.
When compared with other asset classes, these returns show that commercial property performed favourably for September. Equities returned -2.9% and bonds returned -0.3%. This also means that in total, returns now sit less than 29% below their 2007 peak.
Growth is Continuing across the Commercial Market
The IPD’s Executive Director, and Head of UK and Ireland, Phil Tilly, commented on the index’s latest findings. Tilly commented: “The September figures confirm that strong growth is continuing across the UK commercial property market, primarily on the back of positive sentiment on the part of both domestic and overseas sources of capital.
“It is also encouraging to see rental values now playing an important part in the recovery, particularly in the retail sector where they have now grown consecutively for the last four months.” Rental value growth accrued 0.4% on average for September, the highest since June.
Use Commercial Property to Generate Long-Term Returns
In Simon Morris’ opinion, Phil Tilly made some astute observations. Domestic and overseas capital is propelling commercial to new heights, meaning that with careful investment in markets like London, UK property investment funds could use commercial property to generate long-term returns for their property portfolios.