Richard Ellis St Quintin Monthly Index, October 1999

Citation

(2000), "Richard Ellis St Quintin Monthly Index, October 1999", Property Management, Vol. 18 No. 4. https://doi.org/10.1108/pm.2000.11318dab.019

Richard Ellis St Quintin Monthly Index, October 1999

Richard Ellis St Quintin Monthly Index, October 1999

Keywords: Market report, Property returns

Annual total returns for all property on the Richard Ellis St Quintin Monthly Index (Table V) rose to 11.6 per cent in October (Table VI), up from 11.2 per cent in September and their highest level since November 1998.

Annual capital growth increased to 3.9 per cent from 3.4 per cent in September, with the short-term indicator showing 6.2 per cent annualised growth over the past three months (Table VII). Annual rental growth remains steady at 4.9 per cent and has been consistently in the narrow range 4.8 per cent-5.0 per cent p.a. for six months now.

Table VIII. Year to date performance, October 1999

Commenting, Peter Damesick, Head of UK Research, said:

On present trends, property returns should top 13 per cent for 1999 as a whole, which will be a strong performance compared to the other assets and much better than expected at the start of the year. The medium-term cost of money has risen sharply since the first quarter but tenant demand and rental levels have been fortified by the re-bound in economic growth during 1999.

Table V. Richard Ellis St Quintin Monthly Index up to October 1999

Table VI. Annual percentage returns to October 1999

Table VII. Richard Ellis St Quintin short-term indicator, October 1999

There was a sharp improvement in high street retail performance in October, with a 0.9 per cent rise in capital values over the month and annual returns jumping from 10 per cent to 11.1 per cent. Shop rental growth is showing signs of picking up again and yields are firmer.

Retail warehouses did not repeat September's very strong performance, but annual returns improved to 10.2 per cent in October from 9.6 per cent. Industrial performance also eased back compared to September, but a rise in annual returns from 11.8 per cent to 12.5 per cent put this sector back at the top of the performance league, slightly ahead of offices at 12.3 per cent.

Offices had a relatively weak month in October and annual returns actually dipped in this sector. The monthly rise in office rental values was at its lowest level since March and year-on-year growth has now converged towards the all property average.

Annual returns continue to rise

Monthly capital growth for all property remained strong in October leading to a rise in annual capital growth from 3.4 per cent last month to 3.9 per cent. As a result the short-term capital growth indicator (three-month annualised average) was lifted to 6.2 per cent (Table VIII and Figure 7). All sectors showed an improvement in annual capital growth with the exception of offices which slowed marginally from 4.4 per cent to 4.2 per cent. High street retail improved by the largest amount over the month leaping from 2.8 per cent to 3.9 per cent year-on-year (Figure 8).

Figure 7. All property short-term indicator, October 1999

Figure 8. Capital value change to October 1999

Figure 9. Rental value change to October 1999

Figure 10. Total return to October 1999

Figure 11. Year to date - sector returns, October 1999

Annual rental growth remained at 4.9 per cent in October. High street retail rents performed well over the month, showing 5.1 per cent growth in the year to October, up from 4.5 per cent last month (Figure 9).

Total return was 1.1 per cent over the month. If it continues at the current monthly rate, the annual total return at the end of 1999 should reach approximately 13 per cent. High street retail saw a large rise in annual return in October, up from 10.0 per cent to 11.1 per cent. Owing to the slight drop in office annual returns, industrials are now the top performer at 12.5 per cent (Figure 10).

The year to date performance is shown in Table VIII and Figure 11.