UK Property Returns Up Amid Industrial Boom

Annual Total Return by Asset Type

Source: MSCI UK Monthly Property Index

August 2021 saw investment property in the United Kingdom record its highest annual return in more than five years.

According to the MSCI UK Monthly Property index, a total return of 11.6 percent comprised an income return of 5.5 percent and a capital growth of 5.8 percent.

Industrial remained the top sector with an annual return of 27.2 percent for the year to August 2021, its best annual performance since December 1989.

In the index’s history going back to the late 1980s, an outperformance of industrial over office has typically coincided with an underperformance of office relative to retail.

Mirroring previous cycles, industrial property currently benefits from heightened demand which has seen returns increase in unison across all UK regions.

In a similar vein, office property regardless of location, has not shown the same level of recovery as the pandemic casts doubt over the future demand for corporate office space.

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