Returns from UK commercial property are now more likely to be driven by income and rental growth than falling valuation yields, according to Duncan Owen, head of real estate at Schroder Real Estate Investment Trust (SREI). In other words, the easy money in the commercial property recovery has already been won.
IC TIP:
Buy
at
59.5p
This point is nicely illustrated by the investment vehicle's half-year results. Net rental income grew by 10 per cent to £12.4m. Headline profit was lower, but that's because there was no repeat of the £15.1m profit on asset disposals achieved in the previous first half. There was also a smaller net valuation gain on the property portfolio of £11.8m, down from £13.9m a year earlier.