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ROBUST RETURNS
With monthly total returns coming in at 0.6%, this means that on an annual basis the MSCI Monthly Index saw returns come in at 7.1%. This was driven by income returns of 5.7% and capital value growth of 1.3%, albeit the latter saw just 0.1% growth in the final month of the year. Rents have continued to power ahead across all segments of the market.
Retail is a clear winner for the year, posting total returns of 8.8%, with shopping centres at 11.9% and supermarkets at 9%, with central London retail the laggard at a still robust 5%. Offices continued its recovery, with total returns at 3% across the market, albeit the sector is still characterised by bifurcation across segments of the market, with Midtown and West End offices coming in at 8.2%, compared to Rest of South East Offices posting -2%. On a monthly basis, the latter was stable. Elsewhere, Industrial had another strong year, with total returns at 8%, while residential delivered 8.4% on an annual basis.
THE BORROWERS
Net lending increased significantly during November, reaching £2.49 billion. This was the second largest increase in lending since May 2020, falling just short of the increase seen in August 2025. With lending for the last six months at £12.2 billion, this is the highest six-month period since September 2008. This is being driven in part but not solely by refinancing. Net lending to developments increased during November, which is a positive picture for a development market that has been constrained across all sectors.The Bank of England Credit Conditions Survey showed that banks increased availability of lending for the eighth consecutive quarter, with intentions to raise further in Q1 2026, with price expectations for commercial property currently much more positive than for residential. As of the end of November, the share of banks’ total loans to commercial real estate had reached 8.1%, its highest since 2015. Robust performance and a healthy lending environment are both positive signs at the beginning of a year, where we expect to see conditions improve further.
