According to the Investment Property Databank (IPD), the property industry’s metric, the double-digit 2009 UK residential total return is the third consecutive year in which the market has outperformed the broader commercial sector. The IPD UK 2009 Residential Index comprised of an 8.1% capital growth and a 2.7% income return.
London and the South East have led the recovery where prime property has benefited from continued demand both buyers and occupiers and also the weak pound. However, the North and Scotland delivering negative returns for a second successive year which Scotland performance worsened year-on-year.
On an annualised inflation-adjusted total returns basis, the residential sector outperformed the commercial market over three, five and nine years (back to the launch of the index in 2001).
Commenting, James Moss, director at Curzon Investment Property, said: “These figures show that through careful residential investment, buyers can get the same returns they would from commercial property from just the capital increase in housing. This means the income return is wholly additional. Clearly there is still a massive polarization between prime areas of the country like Kensington and Chelsea and deprived areas of the North East, but the fundamentals of what makes a good investment apply right across the board.
“Historically our clients have achieved outstanding returns on their investments which are generally held over a 5–10 year period. Since 1969 prime Central London residential property prices have doubled every 7 years on average. Our tailored strategy for investment identifies the opportunities arising from each individual property and investment portfolio. We assist our clients in finding the right balance to reflect each investor’s requirements and overall investment goals.”
Curzon looks at six key steps to ensure investors get the best return:
• Income yield
• Capital appreciation
• Risk assessment
• Tax considerations
• Property & tenant profile