REAL ESTATE - The total returns on all commercial property in the Netherlands were 12.5% in 2006, ROZ-IPD Netherlands Property Index has reported.

Returns have increased for the fifth consecutive year, and were the highest since 2000, the property data provider said.

According to IPD, the 2006 returns outperformed those of the previous year across all sectors, particularly in the retail sector which yielded 14.9%. The office sector (11.5%) saw an increase of 4.5%.

"Capital growth on all real estate rose to 6.6%, however income return decreased marginally to 5.6%," it stated.

The increase in capital growth from 0.1% to 4.3% was the main driver behind the strong total returns for the office sector. Income returns also increased slightly as vacancy levels dropped, IPD indicated.

"All other property sectors experienced a decrease in their returns. With 7.6%, the industrial sector showed the highest income return," it added.

Further falls in yields, as well as rising rental value in the main sectors, and an increase in the value of vacant residential units, were behind capital growth, the company stated.

"Although equities have seen improved performance in recent years, property still remains the best performing asset class during the 12-year history of the index," IPD Netherlands’ associate director Ian Townson, commented.

"The steep falls in yields seen last year, have been repeated, together with a further boost from improvements in rental value growth."

The total value of the properties covered by its databank is €45.2bn, representing 60% of the total property assets held by financial institutions and property companies, IPD Netherlands said.