The UK real estate market has demonstrated continually strong
performance during the third quarter of this year, with overall
values for all property reaching 3.0% growth.  This was a
slight decrease on Q2 growth - which was measured at 3.3% - and was
the first fall following five successive quarters of increases.

However, the strong level of value growth contributed to the
second highest total return since the first quarter of 2010,
according to the IPD UK quarterly property index.

The third quarter also saw capital value growth moderate
slightly following on from its acceleration in Q2, with rental
value growth improving marginally throughout the UK.  The
majority of capital value growth stemmed from the continued
improvements in investor sentiment, with yield compression adding
2.7% to values over the quarter.

12-month returns for the year (to the end of September) increase
to 18.3% - a significant increase compared to end-June return of
16.4%. The return to the end of Q3 is the highest level recorded
since 2010, reflecting the continuing market upswing throughout the
country.

The industrial sector continued to lead the UK market during Q3
2014, returning 5.4%, a match of Q2 performance.  Office
return stabilised with a return of 5.1% for the quarter. 
Capital performance from the two was matched at 3.9%.

The retail sector continued to be the weakest, with a return of
3.75%. Retail warehouses took over from shopping centres as the
strongest performing property type, with an increase in value of
2.8%.  Rental growth for the sector remained sluggish at 0.2%
for the whole quarter.  Rising capital values resulted almost
entirely from growing investor demand, as reflected by further
yield compression.

Capital growth was mixed throughout the UK.  London retails
and industrials performed well, with value growth for West End
shops the highest for any sector-region combination at 6.2%. 
Offices in the capital were measured as the strongest performers in
terms of rental value growth in the UK.

Phil Tily, executive director and head of UK and Ireland IPD
said:

'The performance of London real estate across all three sectors
stands out once again in Q3, with the strength of the capital's
retailing and its office occupier demand driving returns. 
Meanwhile many UK regions, even if looking slightly more subdued
than in Q2, are still sharing in the overall picture of solid
rental markets and rising values.'

—