UK commercial property has had a good run; over the one, three and five years to December 2017 the asset class has delivered 8-11%p.a. total returns for investors, significantly outpacing UK bonds and closely matching the returns from UK equities. Performance has been reasonably buoyant in the first six months of 2018 also; while growth in the broader economy has been stunted by weather related issues, continued momentum in the UK real estate market has produced c.4% total returns for H1-2018 versus -0.3% and 1.1% for long-dated UK Gilts and UK equities respectively. Even so, this year has started off more challenging than the last; and the recent changes in market conditions will make it difficult to emulate last year’s success.
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