Real estate: Is it now just about income?

Michael Morris, manager of the ING UK Real Estate Income Trust, looks at the impact of capital movements on UK real estate.

The outlook for UK real estate looks more likely to be income driven in the short term rather than the way we have witnessed for the majority of the past decade, which has all been about capital movements, both positive and negative. Figure 1 shows the annual impact of capital movements, which in recent years have shown significant volatility. We have seen annual capital growth of between 13% to -26% - a range of nearly 40% in the space of five years. Longer-term analysis of the UK real estate market tells a different story, which is perhaps relevant to the current outlook. During the...