Commercial property has provided investors with the best returns over the last year although this may now be faltering according to the Investment Property Databank (IPD). The property market analyst’s monthly report shows commercial property ahead of other asset classes with an annual return to July 2003 of 10.3%.
However, equities are fast recovering with British equities returning 3.9% in July, and 3.4% over the past 12 months. Equities’ total returns over the last six months have been 21.4% ‘ outperforming both property and gilts.
The IPD report concluded that: ‘Equity returns are now positive over 12 months, something that has not been achieved since January 2001.Over this time period, gilt returns dropped back to 7%. For the twelve months ending in July, property leads other asset classes with returns of 10.3%.’
Jeremy Hicks, corporate affairs controller at the Chelsea Building Society, said: ‘Investors in property are, in general, disillusioned with equities and prefer the more predictable return of property investments, which is less volatile. While larger investors got into property two or three years ago, it is now being seen as an acceptable investment vehicle by the man in the street.’
Whether the commercial market holds up remains to be seen. In the property sector, total returns for both office and industrial real estate were stable in July while retail showed a monthly return of 1%.
In the office sector, total returns were at 0.4% in July, holding after a decline of 0.3%, from 0.7%, in June.