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News Release

London

Jones Lang LaSalle Unveils Q4 2010 Property Index


London, 2nd February 2011 – According to the latest Jones Lang LaSalle Quarterly Index, all-property total returns slowed to 2.2% in Q4 from 2.4% in the previous quarter.  Capital value growth remained stable at 0.9%, as all sectors showed improved performance in December.  This meant that on an annual basis capital value growth stood at 8.4%.
 
Comparable returns on equities and gilts were 7.4% and -3.5% respectively. Gilts are likely to face further pressure from consumer price inflation which could reach up to 4.0% in the short term due to the rise in VAT, higher food and commodity prices, and rising utility prices.
 
The office sector recorded the strongest returns at 2.7% reflecting capital value growth of 1.2%.  Supply shortages of prime space in the London markets, rather than tenant demand, are expected to drive further growth in 2011.
 
Although average rental growth for all property remained negative at -0.2%, the office sector recorded quarterly growth at 0.5%. The industrial and retail sectors recorded falls of -0.2% and -0.3% respectively. 
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  The Jones Lang LaSalle “style index” continues to show discrepancy in investment performance between prime and secondary assets. Growth properties were ahead of value stocks again, representing strong returns in the office sector. Annual returns were 17.5% for growth properties and 11.6% for value.  The difference in capital growth remained wide at 1.1% for growth properties compared with 0.5% for value properties. 
 
Mike Penlington, director in Jones Lang LaSalle’s Valuation Advisory team, said:  “Going forward we expect to see a continued imbalance between investor appetite for prime trophy assets which will keep their value and secondary space which will face further downward pricing pressure.”