Richard Ellis St Quintin Monthly Index, November 1999

Citation

(2000), "Richard Ellis St Quintin Monthly Index, November 1999", Property Management, Vol. 18 No. 4. https://doi.org/10.1108/pm.2000.11318dab.020

Richard Ellis St Quintin Monthly Index, November 1999

Richard Ellis St Quintin Monthly Index, November 1999

Keywords: Market report, Property returns

Rental and capital growth both picked up strongly in November on the Richard Ellis St Quintin Monthly Index (Table IX), pushing the all property annual return to 12.8 per cent (Table X), up from 11.6 per cent the previous month. The annual return was also boosted by the weak performance of property this time last year.

Annual capital growth increased to 5.1 per cent in November from 3.9 per cent in October, while all property rental growth rose to 5.4 per cent from 4.9 per cent the previous month. All sectors saw faster year-on-year rental growth in November except offices which slipped slightly to 5.2 per cent and have now been overtaken by high street shops at 5.9 per cent and industrials at 5.4 per cent.

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

If November's performance is repeated next month, the all property total return for 1999 will be over 13.5 per cent. Year-on-year returns are currently being flattered by the weakness in capital values at the close of 1998, but the short-term indicators of both capital and rental growth showed a marked improvement in November.

Industrials increased their lead as the best performing sector with annual returns of 14.5 per cent in the year to November, a strong rise from 12.5 per cent the previous month.

Retail warehouses have stormed back into second place in the returns ranking, having dropped to the bottom on the league earlier in the year. The sector's annual return has improved from a low of 8.3 per cent in May to 12.4 per cent in November, helped by a strong rebound in capital growth over the past three months, running at 11.6 per cent on an annualised basis.

Peter Damesick continued:

Some retailers are still finding the going tough, but sales volumes are rising strongly and manufacturing output has recovered on the back of buoyant domestic demand and a pick-up in exports. The favourable economic background looks to be supporting a quicker pace of rental growth in both the retail and industrial sectors.

Strong capital growth for all property

Annual capital growth for all property jumped up from 3.9 per cent to 5.1 per cent in November as a result of the strong monthly growth relative to the poor performance in the same period last year. All sectors showed improvements over the month, but industrials and retail warehouses performed particularly well. Industrial capital growth rose from 3.9 per cent year-on-year to 5.8 per cent, while retail warehouses reported 5.0 per cent annual capital growth, up from 3.0 per cent (Figure 12).

All property rental growth improved modestly during November, with annual growth up 0.5 per cent to 5.4 per cent. Annual rental growth strengthened in all sectors, except offices which slipped back marginally to 5.2 per cent year-on-year, behind high street shops at 5.9 per cent and industrials at 5.5 per cent (Figure 13).

Table IX. Richard Ellis St Quintin Monthly Index up to November 1999

Table X. Annual percentage returns to November 1999

Figure 12. Capital value change to November 1999

Figure 13. Rental value change to November 1999

Figure 14. Total return to November 1999

Table XI. Richard Ellis St Quintin short-term indicator, November 1999

Figure 15. All property short-term indicator to November 1999

All property annual total return now stands at 12.8 per cent, and should comfortably climb above 13.0 per cent by the end of the year. Office annual return increased reasonably from 12.3 per cent to 13.0 per cent, while high street retail improved to 12.1 per cent. However, industrial and retail warehouse annual total returns improved by a full 2 per cent, reflecting their poor performance this time last year (Figure 14).

The Richard Ellis St Quintin short-term indicator is shown in Table XI and Figure 15. The year to date performance up to November 1999 is shown in Figure 16 and Table XII.

Figure 16. Year to date - sector returns, November 1999

Table XII. Year to date performance, November 1999