IPD, the global real estate performance analysis and benchmarking specialist, has published its first ever annual commercial real estate index and quarterly indicator for the United States, backed by 10 years of historical data.
According to the IPD US Annual Property Index, capital growth was -12.2% in 2008. For the 12 months to the end of December 2008, the US all property income return was 5.4%, contributing to an overall total return of -7.4%.
The Annual Index is born out of IPD's core US Portfolio Analysis Services, which began operations in Chicago in 2005 and measures the relative performance of individual funds against peer group benchmarks. The US IPD office has amassed data on $121 billion worth of US commercial real estate portfolios for the first Annual Index, data which is expect to expand substantially in coming years.
The inaugural IPD US Quarterly Indicator, which monitors quarterly movements in US commercial real estate value trends and returns, revealed that capital growth was -10.5% for the quarter ending March 31, 2009. Over the same three-month period, US all property income return was 1.4%, contributing to an overall total return of -9.2%.
Annual sector and regional returns
For the annual period, the Office sector fared the worst, with capital growth of -12.8%. For the same one-year period, the Residential sector, Industrial sector and Retail sector capital growth was -12.2%, -11.7% and -11.4%, respectively.
At the regional level, Western states posted the largest decline with a capital growth of -13.0% for the 12 months to the end of December 2008. Capital growth results were similarly negative for the East, South and Midwest, at -12.3%, -11.1% and 11.0%, respectively.
Simon Fairchild, Managing Director at IPD US, said: "A clear feature of these US results is the apparent synchronization in the downside performance. What ever manner in which we analyze the dataeither across regions or sectorsmarket values have been written down at broadly the same rate. There are small differences, of course, but they are relatively minor compared with historic norms."
Data from the US Annual Index will be fed into the IPD Global Annual Property Indexcomprise of commercial real estate performance data from the 25 most mature national real estate markets and covering over 50,000 assets worth $1.4 trillion as at the end of December 2008providing global property investors with international comparability and benchmarking on a universally consistent methodology for the first time.
Ian Cullen, Co-Founding Director and Head of Systems and Information Standards said: "The IPD Global Index, which now includes a fully IPD consistent US component, offers unrivalled insight into the scale and degree of international synchronization in the erosion of real estate investment value which has characterized the response of major real estate markets to the credit crisis and global economic downturn."
The results of the IPD Global Annual Property Index 2008 will be presented to delegates at this year's IPD European Property Investment Conference in Barcelona on June 4th. The first of their kind, these results will illustrate the extent to which all major global property markets moved in unison during the global recession last year.