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News Release

London

Higher returns in secondary properties compared to primary properties for the second consecutive quarter

According to JLL’s latest UK Property Index


The latest JLL UK Property Index shows higher returns in secondary properties compared to primary properties for the second consecutive quarter with secondary assets returning 4.8 per cent over the quarter, while prime assets returned just 4.6 per cent.
 
While prime properties continue to show consistently higher rental and capital value growth, the higher income return accounted for the outperformance in the secondary market.
Overall property returned 4.6% over the period, up from 3.8% in Q1, bringing the total annual return to 17.5%. Rental growth in Q2 was 0.7%, while further yield compression contributed to a capital value growth of 3.0%.
 
Other key highlights include:
• All sectors showed positive returns with offices the highest at 5.6% compared with 5.1% for industrial and 4.0% for retail.
• When compared to the rest of the UK, London continued to outperform significantly, returning 5.4% compared with 4.3% for the Rest of the UK.
• Compared to other asset classes, property produced the strongest returns over the quarter; returning 4.6%. Equities returned 2.2% while gilts returned just 1.8%.  
 
Andrew Burrell, Head of Forecasting at JLL, said: “The recovery in UK property continues to surprise on the upside, with increasing evidence that it is spreading outside of London and offices. This quarter, rents in retail stabilised after a long decline, while returns in the rest of the UK rose sharply and the gap against the capital narrowed to its lowest since early 2013.”
 
Click here to view the JLL UK Property Index.