New figures have suggested to Simon Morris that the UK’s industrial property sector earned impressive returns for investors in August 2015.
With the economic recovery providing new opportunities for businesses across the country, the UK’s commercial property market has recorded impressive growth rates in 2015. Figures from the FTSE All Share Index illustrated that the IPD UK quarterly property index, which measures total returns of direct UK commercial property investments, rose 3.5% in Q2 2015. This allowed it to outperform the UK’s main market equities during the second quarter of the year.
Comparing commercial classes
The latest CBRE Monthly Index showed that as a whole, UK commercial property provided investor returns of 1% in August 2015. This is a fall from the return rate of 1.2% recorded by the UK’s commercial property sector in July 2015; a decline prompted by the market’s capital growth slip of 0.7% to 0.6% within the same period.
Every Investor wrote that the Index broke these figures down by the component asset classes of the UK’s commercial property sector. This proved that industrial property recorded the strongest investor returns – at 1.4% – for August 2015. In contrast, office property racked up investor returns of 1.2% for the month, ‘other’ followed at 1% whilst retail earned investor returns of 0.8% for the month.
The head of research at CBRE, Mike Gibson, commented on the release of the company’s latest Monthly Index. He said: “Strong returns in the industrial and logistics sectors, as well as in grade A regional offices, are being kept buoyant by a pervading imbalance between demand and supply. This is particularly true in the industrial sector, where newly developed office space is quickly snapped up by occupiers, limiting availability, and pushing up both capital values and rents.”
From these figures, investors may believe that the UK’s industrial asset class may provide them with a lucrative investment opportunity going forward. The sector is strong, the UK’s economy is expanding and the continued supply/demand ratio seems to suggest continued growth. Yet the market can turn, so Simon Morris would suggest that potential investors conduct extensive research before they invest in the UK’s industrial property market.