Returns up 4% in Q1

The commercial property market continues to perform strongly with the latest index from agent JLL showing that overall returns were up by 4 per cent in the first quarter of this year and by 25.5 per cent over the past 12 months.

Capital values increased by 2.6 per cent in Q1 and by 18.5 per cent over the past year. This reflected growth across all three sectors with industrial (+9.8 per cent) recording the strongest increase in the quarter followed by offices (+2.1 per cent) and retail (+1.7 per cent).

Surprisingly overall income dropped by 3.4 per cent in the last quarter because of a vacancy in the portfolio and a newly negotiated lease at a lower rent. Overall rental values increased by 3.5 per cent in the quarter and by 13.4 per cent over a 12-month period. Offices had the greatest increase (+4.4 per cent) followed by retail (+2.5 per cent) and industrial (+2.3 per cent).

Hannah Dwyer, head of research, said the strong returns continued to be driven by increases in capital values with growth across all sectors. Overall, capital values increased by 18.5 per cent in Q1 compared to 18.2 per cent in Q4 2015 and 18.1 per cent in Q2 2015. "This appears to be a relatively stable level over the last three quarters," she said. "Rental values continue to increase and are likely to be a driver of capital growth in 2016, particularly in the industrial sector."