IPD, the world-leader in commercial real estate performance analysis services, today released the results for the 2007 IPD Spanish Annual Property Index. The total return on All Property at end 2007 was 12.5%, lower than the 2006 return of 16.9%. However, property still outperformed the equity and bond markets in 2007, which returned 10.7% and 1.7% respectively.
All Property income return fell to 4.8% in 2007, compared to 5.1% in 2006 and was the lowest recorded income return in the history of the Index. Capital growth also fell away, from 11.3% in 2006 to 7.4% in 2007. Despite a weaker performance in 2007, over three years all property still remained very attractive with a total return of 15.5% y/y. The Industrial sector was the top performer in 2007, with a total return of 15.7%. Income return, which has been historically higher than other sectors, achieved 6.5%, while capital growth was still relatively strong, at 8.7%.Total returns on the Retail and Office sectors came in at 14.1% and 9.9% respectively.
In comparison to other IPD country indices already released for 2007, the Spanish results are towards the middle of the group. Other IPD index results for 2007 published so far are: South Africa (27.7%), Korea* (26.9%), New Zealand (22.4%), Norway (18.3%), Australia (18.1%), France (17.8%), Canada (16.1%), Sweden (14.9%), Portugal (12.4%), Finland** (11.3%), Netherlands (11.3%), Denmark (10.2%), Ireland (9.9%), and the UK (-3.4%).
Elsa Galindo, Manager of IPD Spain said, "The world financial crisis and the uncertainty of the evolution of the Spanish economy has had a negative impact on the performance of the property investment market in Spain. After several years of constant growth reaching maximum historical values, the investment market is facing a readjustment in rental and market values, although it remains strong."