Guy Morrell, manager of the HSBC Open Global Property fund, considers the outlook for the property market and what levels of return investors can expect.
Relative to its historic average, UK commercial property delivered exceptionally strong returns in 2010. During the 12 months to November 2010 nominal total returns were 17.6% according to the IPD UK Monthly Index. Calendar year returns for 2010 are expected to be between 14% and 15%. This implies a real return of more than 9%, which is significantly higher than the long-run average real return of that index of 5.2% pa (see the graph below). So will 2011 be another year of exceptionally strong returns in the UK? We do not expect the levels of return experienced last year to be repeate...
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