MSCI Inc. is a leading investment decision and support provider. The company offers their expertise worldwide, and they had conducted a study which has revealed a 5.6% total return in the residential property market in the UK for 2016. This figure shows the return for all the UK residential assets that are held in the MSCI database for private real estate. This also includes residential portfolios as well as residential assets that make up wider commercial portfolios.
The Annual Residential Property Index carried out by IPD UK takes into account properties that have been let on modern residential leases, primarily assured short hold tenancies and non-market let assets as well such as student accommodation, ground rent, and also regulated tenancies. This is on top of residential assets taken from a broader UK balanced funds sample. The index enables the performance of 11,201 property investment to be tracked. These investments have a combined capital value of £12.1 billion as of December 2016. This value is a significant improvement in investment from the year before.
The research has shown that the UK residential sector was the second best performing sector within UK property investment in 2016. The sector with the best performance was industrial. However, residential housing has outperformed. Over a longer term, and during the last 16 years that the residential index has been carried out, the residential market lets have had the largest total return of the mainstream UK asset classes. The asset classes include bonds, equites and listed real estate. The residential sector has also outperformed other property types which include retail, office, and industrial. This outperformance means that the residential sector has the lowest rate of volatility.
Looking at the residential property market sector, the let assets fell on average by 2.8% for capital and 1.5% for rental in London. However other regions saw capital growth of about 4%. Exceptions to this figure were the South West, Midlands and Wales where there was capital growth of 1%.