Retail continues to be the strongest sector and annual rentalgrowth in the sector picked up from 1.6% in March to 2.2% inOctober. However GVA Grimley expects rental growth to slow to 1.6%next year because of an anticipated slowdown in retailexpenditure.

The office sector is weak, influenced heavily by the collapse inoffice rents in London and the South East. Overall UK office rentalgrowth slumped to -2.4% in the year to October 2002 against +4.8% ayear ago Away from the South East, rental growth is far more stablearound the 2% per annum mark where it has stayed for nearly 18months.

However despite slow rental growth, investors are still seeingattractive overall returns from property because of the yield shiftthat is driving capital growth. In the year to October propertyproduced an overall return of 10.2%. Returns are expected to reduceslightly next year on the back of weak rentalgrowth and stableyields.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.