Confidence in UK commercial real estate is close to reaching its peak, according to the Investment Property Forum (IPF).
The research, part of the IPF’s 2011-15 programme, found that forecasts for next year and beyond were “moderate”.
Average capital value growth rates are expected to fall back substantially next year, IPF said.
Rental value growth is expected to fall to 1.9% by 2018, with the rate of capital value decline predicted to accelerate to just below zero.
IPF said wide variations between individual sectors would “diminish with time”.
“As total returns forecasts reduce, the performance rankings between sectors shift,” IPF said.
The industrial sector is set to outperform the office sector in 2016, with the latter expected to be the weakest market segment.
In the short-term, however, annualised rental and capital value growth rate averages increased over the third quarter, to 2.7% and 3.6%, respectively.
IPF said the growth was the result of further improvement in near-term expectations.