The new year has brought a number of commercial property fund launches and fundraisings reflecting rising interest in the sector. This is a continuing trend: we reported in August that investors are turning back to commercial property funds because of attractive yields relative to cash, equities and bonds.
And, now, sustained capital growth has also returned to UK commercial property, with data for the month to end-November 2013 showing it was the seventh consecutive month of capital growth, reports Simon Moore, research team leader at wealth adviser, Bestinvest.
UK commercial property delivered a total return of 2.8 per cent in the third quarter of 2013, according to the IPD Quarterly Index. This was an improvement on 1.9 per cent in the second quarter and the highest level of performance delivered since the fourth quarter of 2010. Performance was driven by a 1.4 per cent income return and 1.3 per cent capital growth.
"It was the favourable sentiment towards property as an asset class which was the striking feature of performance in the third quarter," says George Shaw, manager of Ignis UK Property Fund (GB00B053C307). "This lifted the performance of the weaker non-London/South East/Prime markets by a significant amount."