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News Release

London

2014 - the best performing calendar year for commercial property since 2005

According to JLL’s latest UK Property Index


London, 29th January 2015 – JLL’s latest UK Property Index has shown that 2014 was the best performing calendar year for commercial property since 2005, returning 4.4 per cent over Q4 2014 and bringing total return over the year to 18.3 per cent.

Rental values also continued to rise, showing growth of 1.0 per cent over the quarter; the fastest rental growth over a single quarter since late 2007, whilst yield compression helped to drive up capital values by 2.7 per cent.

Although capital growth in prime properties remained strong at 3.1 per cent, secondary properties also benefitted from uplift with capital values rising by 2.0 per cent over the quarter. In terms of returns, both ends of the market performed strongly with prime properties returning 4.5 per cent compared with 4.0 per cent for secondary properties.

Andrew Burrell, head of Forecasting at JLL, said: “The very strong rebound in property performance was supported by the robust economic recovery, with growth rates at a post-crash high. This year should be more of the same for the economy, and even if there is a tempering of returns as yield shift slows, the healthy outlook is set to continue for property.”
 
Other key highlights include:
· London continued to outperform the rest of the UK, returning 6.0 per cent and 3.8 per cent respectively
· All sectors showed positive quarterly returns with industrial the highest at 7.3 per cent compared with 5.6 per cent for offices and 2.2 per cent for retail
Compared to other asset classes, property was outperformed by gilts at 8.3 per cent but still continued to produce higher returns than equities over the quarter at 0.6 per cent