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News Release

London

Office real estate investment offers strongest returns

According to Jones Lang LaSalle’s Q1 2012 UK Property Index


Jones Lang LaSalle has published its Q1 2012 UK Property Index which highlights that the office sector recorded the strongest quarterly returns at 0.9% in Q1 followed by the industrial sector at 0.8% and retail at 0.3%.
 
Mike Penlington, director in Jones Lang LaSalle’s Valuation Advisory, team said:  “The Jones Lang LaSalle “style index” shows that secondary assets (value properties) continue to struggle with annual returns of just 2.3% compared with 8.3% for prime (growth) properties in Q1 2012. In addition the index shows that capital values for secondary assets slipped further in Q1 2012 by -2%. We would expect that prime assets will continue to outperform more secondary assets as the market continues to demand a higher premium for taking on more risky situations."
 
Other key highlights from the research include:
 
·         Property Total Returns declined to 0.7% in Q1 2012 compared with 1.4% in Q4 2011 , as the declines in capital values worsened (-1.0% against -0.2% in Q4).
·         Annual returns over the past 12 months were 6.1%, a significant drop from the end-2011 figure of 10.9%. Growth was driven by income as capital values dipped below last year’s levels.
·         Equities were the weakest performing asset over the past year, but returns rebounded to 6.1% in Q1 2012 compared with -4.0% for Gilts and 0.7% for property.
·         Rental growth for all property remained stable at 0.2% in Q1 2012, driven in large part by the office sector which recorded quarterly growth of 0.9%.