Strong performance in the office and industrial sectors this year could lead to double-digit returns for UK property, the IPF said following a survey of independent forecasts – with 2014 the likely peak of the market.
The Investment Property Forum looked at a range of independent forecasts for 2014, concluding that the consensus for total returns this year was 12.1%.
The office and industrial sectors are expected to perform strongly, tipped for respective returns of 14% and 13.5% in turn.
Earlier this week, Aviva Investors and BNP Paribas Real Estate both predicted double-digit returns for UK property in 2014.
The IPF said all sectors were forecast to deliver double-digit returns, driven by above long-run average capital value growth rates from 5% for shopping centres to 8.4% for offices.
Capital value growth rates are expected to exceed the long-run annual average of 2.5% substantially.
The average forecast for all UK property capital value growth rate is now 6.2%.
On average, rental growth expectations are fairly stable for 2014 to 2018, at between 2% and 2.5% a year, the IPF said.
With 2014 marking a peak, the downward move in capital growth and total returns is “presumably a reflection of forecasters’ views on yields”, the IPF added.
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