INDUSTRY NEWS

Commercial office space returns 15.2 per cent in 2010

Property investors saw a 15.2 per cent return on UK commercial office space in 2010, driven by a solid performance from central London office space, according to the IPD UK Quarterly Property Index.

The results from the index showed total annual growth comprised of 8.3 per capital growth and a 6.4 per cent increase in income return.  The total return in 2009 was only 2.8 per cent, which consisted of 1.3 per cent capital growth and 1.5 per cent income return.

Malcolm Frodsham, IPD research director, said: “Central London offices were the stars of the show – with City offices slightly ahead, at 23.9%, followed by West End offices at 23.1%.”

Shopping centres were also strong performers, topping the retail hierarchy at 17.5 per cent, compared with -6.2 per cent in 2009.

“The differences in returns came from two main factors: firstly, a full year of central London office rental growth, at 6% – surprisingly eclipsed by central London retails’ 6.8%,” added Frodsham.

IPD co-founding director Ian Cullen said: “There is still a differentiation between prime and secondary in terms of return delivery, the rule more or less still holds that prime does best. But we are starting to see exceptions, as is becoming evident for central London offices, which are now delivering stronger returns among the higher-yielding properties.”

Commercial property news brought to you direct from DeVono Cresa, experts on London office space.

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