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According to Jones Lang LaSalle’s latest UK commercial property forecast
London, 1st July 2013 - Jones Lang LaSalle’s latest UK commercial property forecast shows a modest improvement in the economic outlook with all-property total returns revised up to 5.8 per cent for 2013, from 4.6 per cent in the firm’s previous forecast in March this year. Of all commercial property sectors, offices are projected to deliver the strongest total returns between 2013 and 2017, averaging 7.5% per year with central London markets outperforming other segments.
Meanwhile, the UK industrial sector is expected to do better than retail over the next five years, boosted by the higher income returns, while weaker performance in shopping centres will continue to weigh down on overall retail returns, although West End shops will continue to out-perform.
Mark Jones, Director of Strategic Asset Management at Jones Lang LaSalle, said: “Returns will still be driven principally by the income component, with a modicum of rental growth. With property yields below their long-term averages across most markets and bond rates rising, any potential inward shift will remain limited. However, property should still produce a respectable medium term real return in the order of 5 per cent per annum.”
Andrew Burrell, Head of EMEA Forecasting at Jones Lang LaSalle, added: “Although forecasts for short-term performance across most indicators have improved slightly, the fragile upturn in the economy means that rental growth projections over the longer term are still significantly below trend. Even by the final years, rents barely keep pace with inflation.”
Emma Hollingshead - PR
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