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Emerald Group Publishing Limited
Copyright © 2000, MCB UP Limited
Listed office buildings
Listed office buildings
Keywords: Listed buildings, Offices, Investment
Research carried out for the RICS and English Heritage demonstrates that listed office buildings are capable of producing a financial rate of return as good as, and in many cases better than, more modern office buildings. A study entitled The Investment Performance of Listed Office Buildings was published on 7 January 2000, carried out by Investment Property Databank on behalf of the RICS and English Heritage as part of a long-term monitoring exercise to track the investment performance of listed office buildings.
Many of our towns and cities are enriched by the presence of listed buildings, representing the very best of architecture from all periods of our history. Many were built as private houses, and a great number have now been converted to commercial use, providing very desirable and prestigious office space.
Property investors and developers need also to be informed about the rates of return that they can expect from investing in our built heritage:
In 1998, the total return on listed commercial buildings was 11.9 per cent, compared with 11.4 per cent for unlisted buildings. This superior performance was achieved largely on the back of strong rental value growth at 12.5 per cent, well above that in the unlisted office market at 9.7 per cent.
Over the full 18 years of the IPD databank, listed and unlisted buildings have achieved near identical returns, of 8.8 per cent and 8.9 per cent respectively.
Listed offices in London produced a return of 12.8 per cent in 1998, compared with 11 per cent for unlisted offices. Again, this was as a result of superior rental value growth. Listed offices in London have out-performed their unlisted equivalents in two of the last three years.
Outside London, listed offices have not performed so well in 1998, with returns of 8.7 per cent, compared with 11.9 per cent for their unlisted equivalents. However, over the entire 18 years of the analysis, listed offices outside London have produced a rate of return of 8.9 per cent, higher than either London-based listed offices (8.8 per cent) or unlisted offices outside London (8.7 per cent).
RICS representative on the research project, Colin Redman of Grosvenor Estate Holdings said:
By demonstrating that listed office buildings can be a good investment, I hope that this research will encourage developers and investors to think sensibly about contributing to the vibrancy and sustainability of our towns and cities by restoring and in some cases bringing back into use listed buildings.
David Tomback of English Heritage added:
English Heritage is keen to demonstrate the economic benefit of conservation-led regeneration. This research provides the evidence investors need to give them the confidence to invest in listed buildings.