Posted by: Jennifer Townsend
Information & Data Research
Jones Lang LaSalle EMEA Research
Winter weather is drawing in- I took the plunge and pulled my winter wardrobe from its storage ready for the switch from flowery frocks to dark woollens. But what was it I saw as I looked out the window– sunshine. Nothing is nicer than when you are all prepared for darkness and grey clouds and a shard of sunshine breaks through – much like this quarter’s Jones Lang LaSalle UK Property index results…
The property index is a quarterly publication tracking the performance of a sample of over 700 properties valued at over £7.8 billion in Q3 2012. It has proved to be a good indicator of the market over time and is one of the longest running records of property performance spanning over thirty years. After showing “grey weather” in previous quarters a ray of sun came through in Q3 with the following headlines:
- Despite the economic uncertainty, total property returns increased to 1.3% in 2012 Q3 compared with 0.4% in Q2. This was the largest quarterly increase since Q4 2011.
- On a sector level, retail recorded the strongest returns at +1.3%, with properties in prime locations and retail warehousing the largest contributors to growth. Offices recorded returns of 1.2% and Industrial 1.0%.
However, the British weather is nothing if not unpredictable. As I was ready to put away the coat and scarf and pull out those shorts again, the sun disappeared. In parallels, whilst there was some sunshine in the index results, there was also some rain. Annual returns for 2012 to date were still significantly below previous years at 3.8%, compared with 8.4% at the same time in 2011. Capital growth also remains at -2.9% on an annual basis, as it continued to decline for the fourth consecutive quarter.
Investors will need to watch the weather conditions carefully going forward and I won’t be putting on my shorts just yet…