Yields move out for first time in six years

Figures for June saw all-property equivalent yields rise from 5.38% in May to 5.4%. The main shift was seen in the retail sector, where yields moved out from 5.09% to 5.15%.

All-property total returns remained flat, showing a 0.7% return for the third consecutive month, outperforming bonds at -4.9% and equities at -0.8%.

Angela Sheahan, research manager for IPD, said: ‘Although all property month on month returns remain flat, for the first time in six years we have seen equivalent yields move out. While the rental growth in offices counteracted the outward yield movement, retail saw capital values fall in June.’

The half-year report for 2007 saw property achieve total returns of 4.4%, outperforming bonds at -6.6% but lagging behind equities at 7.6%. Unsurprisingly, offices have achieved the best return for investors, achieving a 6.9% return compared to retail returns of 2.9% and industrial returns of 4.2%.

All-property rental value growth increased once again from 0.3% in May to 0.4%. So far, 2007 has seen all-property rental growth of 1.8%.

The IPD index is based on a sample of more than 4,3000 properties worth over £58bn.