Capital's total return in the index was 27,2%, which substantially exceeded the average of 15,1%.

The IPD benchmark total return across all properties of 15,1% is the highest yield since 1994.

The 2003 index was boosted by the continued strong performance of large regional shopping centres and the recovery in the industrial sector, as well as the reduction in vacancy levels across all property types - down from 13% to an average of 10,8%.

JHI Real Estate, the asset and property managers for Capital Property Fund, reports that key areas of focus have been the reduction of vacancies and keeping operating costs in check.

Over the past three years, continued attention to retaining existing tenants, as well as targeting vacant space, have seen vacancies drop from 15% at the beginning of 2002 to current levels of 6,5%, which compares favourably with the index average vacancy rate of 10,8%.

The portfolio has also been upgraded through sales of underperforming properties and selected purchases. Andrew Teixeira, director of property management at JHI Real Estate, said demand for industrial premises remained strong.

"The lack of adequate supply in the newer primary industrial nodes has resulted in demand for space in the secondary nodes being taken up, and enhances potential for selective new development.

"The office market remains competitive but it is pleasing to note the take-up of space in the primary nodes and a modest take up of space in the secondary ones.