2014 best since 2005 29th January 2015

2014 was the best performing calendar year for commercial property since 2005, returning 4.4% over Q4 2014 and bringing total return over the year to 18.3%.

Rental values also continued to rise, showing growth of 1% over the quarter - the fastest rental growth over a single quarter since late 2007, while yield compression helped to drive up capital values by 2.7%.

Although capital growth in prime properties remained strong at 3.1%, secondary properties also benefitted from uplift with capital values rising by 2% over the quarter. In terms of returns, both ends of the market performed strongly with prime properties returning 4.5% compared with 4% for secondary properties.

Other key highlights include:

• London continued to outperform the rest of the UK, returning 6% and 3.8% respectively

• All sectors showed positive quarterly returns with industrial the highest at 7.3% compared with 5.6% for offices and 2.2% for retail

• Compared to other asset classes, property was outperformed by gilts at 8.3% but still continued to produce higher returns than equities over the quarter at 0.6%