Lower returns in Q4 2012 – Jones Lang LaSalle
Jones Lang LaSalle in the final quarter of 2012 fell to 1.0% as a result of the continued decline in capital values and weaker income growth. In its Property Index update for the quarter, the firm notes that results varied across sectors, with office property producing returns of 1.3%, retail property returns coming in at 0.9% and industrial property returns at 1.2%. Overseas investors have continued to drive the outperformance of the offices sector, Jones Lang LaSalle says, as they see prime office space as an effective tool for wealth preservation.
The firm notes a continued discrepancy between the investment performance of prime and secondary assets. Annual returns for Q4 2012 were 5.7% for prime (‘Growth’) assets but secondary (‘Value’) properties recorded negative returns of -0.9%, JLL points out. On a quarterly basis, returns declined in Growth assets to 1.3% in Q4 2012 from 1.7% in the previous quarter, while Value assets were up slightly at 0.4% in Q4 2012 from 0.3% in Q3.
Rental growth stagnated at zero at the All Property level in Q4 2012, with limited growth in offices offset by rental declines for industrial property and retail property, JLL notes.
