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UK Commercial Property Returns Turned Positive in Q3 2009 after 8 Quarters

UK commercial property returns turned positive after eight quarters of negative performance, according to the just released IPD index for the third quarter of 2009.

In particular, the All Property Index (which incorporates office, retail, industrial and other) posted a total quarterly return of 3.4%, representing the sum of an income return of 1.9% and capital growth of 1.5%.

This represents significant improvement over the previous quarter when UK commercial property posted a negative performance of -2.2%, representing the sum of an income return of 1.8% and a capital value decline of -4%.

Clearly the improvement in UK commercial property returns in the third quarter of 2009 was due exclusively to the increase in commercial property values, representing an improvement of 5.5 percentage points in the capital growth component of the All Property IPD Index.

Retail was the best performing property type in Q3 2009 with a 4% total return and a 2.1% capital growth, followed by industrial with a 3.5% total return and a 1.5% capital growth. Office was the worst performing property type with a 2.6% total return and a 0.7% capital growth.

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Internal Rate of Return(IRR)
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Potential Gross Income Multiplier (PGIM)
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Effective Gross Income
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Band-of-Investment Formula for Estimating a Market/Required Capitalization Rate
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Before Tax Equity Cash Flow (BTECF)
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Loan Amount
Debt Service
Mortgage Constant
Payback Period
Breakeven Occupancy
After Tax Cash Flow (ATCF)
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One-Period IRR
Income Tax Payment in Association with Income Producing Property
Capital Gains
Formula for Cash Flow for Last Period of Analysis
Future Resale Price
Annual Rental Income of Occupied Multi-Tenant Property
Multi-Period Lease Rate Growth Formula with Intertemporally Variable CPI Forecast
Multi-period Lease Rate Growth Formula with Constant CPI Forecast
Present Value (PV)
Net Present Value (NPV)
Profitability Index
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Related Posts
UK Commercial Property Prices Increased in September 2009
UK Commercial Property Market Trends, Q2 2009
Trends in UK Commercial Property Rents, Q2 2009
UK Commercial Property Forecast
Trends in UK Commercial Property Returns, June 2009
UK Prime Yields in June 2009
US Commercial Property Value Declines Continued Decelerating in Q3 2009
Commercial Property Prices in the West Dropped More Than 8% in Q2 2009
Are US Commercial Property Prices Still Declining?
Outlook for US Mortgage Rates, August 2009
Trends in US Commercial Real Estate Returns

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Return from UK Commercial Property Returns Q3 2009 to Market Watch