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News Release

London

Jones Lang LaSalle publishes Q3 2012 UK Property Index figures


​Despite economic uncertainty in the Eurozone and the UK, Q3 2012 saw some improvement with total property returns increasing to 1.3% in Q3 2012 compared with 0.4% in Q2 2012. This was the largest quarterly increase since Q4 2011 but annual returns for 2012 to date were still significantly below previous years at 3.8% compared with 8.4% at the same time in 2011. However there is still a divide in performance between sectors and prime and secondary markets meaning careful stock selection will remain a priority for investors.

Commenting on the figures, Mike Penlington, director in Jones Lang LaSalle’s Valuation Advisory team, said: “Increased investor focus on the underlying fundamentals is leading to a continued divergence in depth of bidding and pricing between prime and secondary investments."
 
Other key highlights from the research include:
• The Jones Lang LaSalle “style index” highlights a continued discrepancy in investment performance between prime (growth) and secondary (value) assets. In 2012 Q3, annual returns were 6.4% for growth and just -0.8% for value properties, as the UK secondary market continues to see the sharpest capital declines. There is a clear divide between prime and secondary and while the prime sector should remain resilient, prospects remain highly polarised and other segments of the markets will continue to struggle.
• Capital Value growth remained negative at – 2.9% on an annual basis as it continued to decline for the fourth consecutive quarter. However at-0.5% for 2012 Q3 it was less than the fall of 1.3% seen in the previous quarter. Income return offset decline in capital values.
• On a sector level, retail recorded the strongest returns at 1.3%, with properties in prime locations and retail warehousing being the largest contributors to growth.  Offices recorded returns of 1.2% and Industrial 1.0%.
• Equities remained resilient over the quarter recording a 4.7% increase. Indeed all asset classes showed growth with 1.0% for Gilts and 1.3% for Property.
• All property rental growth remains limited at 0.4%.  Whilst retail saw some improvement it is the offices sector that continues to contribute most to this figure.