UK property investment returns fall 10.4% in 2022 - MSCI

A general view of the Broadway development site in central London

By Elizabeth Howcroft and Carolyn Cohn

LONDON (Reuters) - UK property investment returns fell 10.4% in 2022, in a sharp turnaround from gains of 20% in 2021, MSCI's monthly UK property index showed on Tuesday.

Much of the losses came in the second half of the year, which saw returns of -18%, the index showed. Industrial properties make up 41.1% of the index, with office (26.3%) and retail (21.5%) the next biggest groups.

Britain's commercial real estate market has come under pressure from high inflation and economic uncertainty.

Several open-ended property funds have put restrictions on withdrawals to prevent a stampede for the exits.

Federated Hermes has deferred redemptions since August on the FH Property Unit Trust "to allow orderly asset sales", a spokesperson for the asset manager told Reuters, bringing property fund assets facing curbs to more than 16 billion pounds ($19.65 billion).

Earlier in January, an index published by CBRE showed UK commercial property values decreased by 13.3% as a whole in 2022, and annual total returns were down 9.1%.

(Reporting by Carolyn Cohn; Editing by Nick Macfie)