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News Release

London

Offices to deliver strongest property returns in 2014

According to JLL’s latest UK commercial property forecast


​JLL’s  latest UK commercial property forecast shows all-property total returns of over 10 percent in 2014. This is broadly in line with last year’s outturn of 10.7 percent. All three sectors will deliver similar returns over the next five years, with offices averaging slightly higher at 8.5 percent a year, compared with 8.4 percent for the retail and industrial sectors.

Mark Jones, Director of Strategic Asset Management at JLL, said: “Total returns are expected to remain strong this year, reflecting modest rental growth while yields compress further, as secondary sectors mirror the inward movement seen at the top-end of the market. However, as interest rates and bond yields start to increase from mid-2015 onwards, property yields will begin to face growing upward pressure, dampening capital growth towards the end of the forecast horizon. Property will remain a relative return winner over the short term.”

Andrew Burrell, Head of EMEA Forecasting at JLL, added: “Stronger IPD rental growth is expected this year, with the offices sector strongest, driven again by Central London. Encouragingly, the recovery also broadens to encompass offices outside of the capital and industrial and retail segments – all of which had struggled over the previous two years.”

JLL Forecasts of IPD UK 2014 - 2018