NORTH AMERICA - US investors anticipate a return of 9.6% on commercial property this year - though they expect that return to fall to 7.9% in 2013, according to the US Pension Real Estate Association quarterly consensus forecast survey.
The survey, which last month asked 22 investors active in the US real estate market to forecast likely returns based on the NCREIF property index, found anticipated decline next year across property types.
The best performing this year will be residential at 10.7%, but that figure is likely to fall to 8.6% next year and to 7.7% in 2014.
The smallest anticipated decline was in office - the worst performing category this year - from 8.7% this year to 7.8% in 2013.
Industrial produced the biggest surprise, according to the report's authors.
Although industrial was previously perceived to have the lowest potential of all the categories, in this quarter, investors rated the likely return above all categories except residential.
They also expected it to perform in line with residential over a five-year period.
Income accounted for most of the return for both industrial and retail. Both categories produced an income return of 6.3%, compared with a capital appreciation return in 2012 of 3.1% for industrial and 2.8% for retail.
The report's authors attributed a narrowing of forecast average returns on industrial and retail to investors pricing in strong anticipated returns.
"It appears that the average forecaster has not, at least as of yet, downgraded their forecast in response to the renewed and deeper crisis in Europe and weak job numbers recently seen in the US," the report said.
"Perhaps the economic clouds will prove passing and real estate fundamentals will be unaffected, or perhaps the macro environment is already reflected in the anticipated slowdown through 2013 and 2014 seen in this survey."
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