UK Industrial Property Drove Index Return as Yield Compressed to All-time Low

Sector contribution to index return

Source: MSCI

Property returns in the United Kingdom continued its upward trajectory and finished October 2021 at its highest level in six years.

For the 12 months ending Oct. 31, the total return of the MSCI UK Monthly Property Index was recorded at 14.7 percent, the highest since October 2015’s 14.8 percent.

The returns measured for these two periods were similar but the underlying sector drivers were very different. While the investment performance of the main property sectors were relatively evenly matched in the first half of the 2010’s, the industrial sector dominated since then and -on an annual returns basis- has now been the top performing sector in the MSCI UK Monthly Property Index for a streak going back 67 months to April 2016.

This consistent outperformance, largely driven by yield compression, drove industrial to become the largest sector by value in the MSCI UK Monthly Property Index at 41 percent, up 2.4 times over 10 years. This came mostly at the expense of the retail sector which saw a reduction from 58 percent in 2004 to 22 percent at the end of October.

MSCI is a leading provider of critical decision support tools and services for the global investment community. With over 45 years of expertise in research, data and technology, we power better investment decisions by enabling clients to understand and analyze key drivers of risk and return and confidently build more effective portfolios. We create industry-leading research-enhanced solutions that clients use to gain insight into and improve transparency across the investment process.