Quote:
Originally Posted by Gerry Pridham
Extract from article:
This takes the total drop in returns (capital values plus rental income) since the property market turned last summer to 9.5pc
If this is the worst it gets, it's still way above my highest stochastic, which means (for our portfolio) a return on invested capital of 18% per year. Roll on the retirement.  |
The article says that there has been a
drop in returns of 9.5% since June 2007. I read this as -9.5%.
For example, a commercial property had a value of £100,000 in June 2007 and it had rental income of £500 per month. Between June and December 2007, the property generated £3,500 in rental income but lost £13,000 in market value. So by December 2007 the property was worth £87,000. Hence a 9.5% drop.
Is that right? I don't think it can be as that is an almighty crash in just 6 months. So what does this 8.5% figure actually indicate?