Property beats shares

By ANDREW OXLADE, COLUMNIST
Updated:

 

INVESTING in property was almost twice as lucrative as UK stocks over the past five years, a leading stockbroker has admitted.

A new report from Barclays Private Clients shows UK shares delivered a real average rise of 4.8% each year between 1996 and 2001 while property delivered 9.5%.

However, the company bravely predicts the world's major stockmarkets, most of which are more than 20% off their peaks in 2000, will bounce back between 10% and 15% within the next 12 months.

'While over the past five years we have seen relatively lower returns from equities, this has been particularly affected by the corrections in the past two years in sectors such as technology, telecoms and dotcom start-ups,' insists Hilary Cook, the company's director of investment strategy.

'Commercial property, meanwhile, has benefited from an upsurge in rental values to what now looks to be unsustainable levels.'

Barclays Private Clients, which has switched its focus from brokering to 'wealth management' says investors should have a balanced mix of shares, bonds, property and cash.

The annual Barclays study, which illustrates returns after inflation is taken into account, shows even gilts, considered very low risk, beat shares over the past five years with average annual returns of 7.3%.

Looking back over 10 years, a period that encompasses one of the longest stockmarket bull runs in history, shares delivered only 8.6%, slightly ahead of 8% for gilts and 7.6% for property.

Investors should not confuse the asset class of property with house prices. Property portfolios mainly comprise commercial buildings.

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