US commercial real estate suffered its worst annual capital return on record1, according to the IPD US Quarterly Property Indicator, which fell -23.9% in 2009, taking the total capital decline to -33.4% from December 2007 when real estate values were at their peak.
The US is the fourth market for which IPD now has a full calendar year worth of figures to analyse. The Indictor shows:
· Cap rates softened by 140 basis points over the year to end 2009 at 7.1% - the highest level in six years;
· New York, Washington and Chicago all suffered slightly less severe market value write-downs than the broader US market, while LA and San Francisco both fell further than national average;
· A distinct geographic trend in the pace of capital depreciation was also visible at sector level, with East Coast outperforming the West Coast in all four main sectors;
· Income returns, at 6.6%, partially offsetting the falls in value and contributing to an annual total return of -18.7%.
The second IPD Index News bulletin, which compared on the Dutch and UK real estate markets, is also now available.
Canada's annual capital and total returns will be published on Thursday, while IPD is to publish the annual indices for Sweden, Denmark, Austria and Finland next week.