In 2006, Kent experienced an average 1.5% increase in office rental value growth, matching that of the South East as a whole at 1.4%. However, both Kent and the South East have seen slower rental growth in comparison to the UK. Occupier demand for office space has been increasing across the South East, with activity beginning to move out from Central London.
Average office yields in Kent have continued to fall since end December 2003, in line with South East and UK office yields. This yield compression is expected to ease in 2007. Total returns for Kent offices have slipped slightly from 22.4% at end-2005, to 16.8% at end-2006.
Industrial rents in Kent rose by 1.1% in 2006, matching that of the South East. UK industrial rental growth was fractionally higher at 1.3%. Occupier demand for industrial property across the South East has increased since the start of 2007.
Industrial property yields are continuing to compress, falling in line with those of both the UK and South East industrials. Total returns have also slipped, down from 19.1% at end-2005, to 16.8% at end-2006. Kent’s total return performance is now slightly lower than that of both the UK and South East, where returns were 17.7% and 17.4% respectively at end-2006.
Growth of high street retail rents in Kent was slower in 2006, although for the last five years Kent rental value growth has been consistent, but has only averaged 1.4% per annum. This underperformance is exemplified when compared to the South East and the UK where values grew by an average of 2.5% and 2.2% per annum over the last five years. |
High street retail yields have been on a downward trend since December 2001, with yields in Kent, the South East and the UK all falling broadly in line to 5.0%. Total returns have been strong, averaging 15.8% per annum over the last five years. However, total return performance in Kent has been lower than that of both the South East and the UK at 17.3% and 16.2% per annum over the last five years.
Retail warehouse rental value growth in Kent recovered in 2005/2006 from its low point at the end of December 2004, to outperform that of both the South East and the UK. Last year Kent retail warehouse rental value growth averaged 5.1% compared with 2.9% for the whole of the UK.
Total return performance for Kent retail warehouses slipped from 16.9% at end-2005, to 10.9% at end-2006.
Property Total Returns
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Investment Yields
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