The report also highlighted a recovery in office rents since February 2003, and in Q3 recorded their first positive growth in three years. But retail and industrial property rents have been fairly static, the report adds.
Over the last quarter investment returns have slowed across the three property sectors. Yields are still falling, but their impact is not as strong as a few months ago. The result is that capital growth has slowed. While commercial property returns continue to outperform British stocks substantially, during the past three months equities have re-emerged as the top performing UK asset class with returns of 5.8%. From January to September, property shares were the British equity market's third best performing sector. Commercial property accounts for 5% of Britain's GDP, a greater share than the banking or leisure sectors, and it is twice the size of the domestic oil industry.
But it is still dwarfed by the residential market, which at euro 4.3 trillion ($5.6 trillion) is the largest UK capital market--eight times the size of the commercial property market and twice the size of the equities market.
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