Standard Life Investments, one of the largest property investors in Europe, believes that confidence is returning to the commercial property market, with the UK furthest advanced in the cycle.
Standard Life Investments, one of the largest property investors in Europe, believes that confidence is returning to the commercial property market, with the UK furthest advanced in the cycle.
In the latest edition of Global Perspective1, the global fund manager argues that, over a three-year time horizon, property returns are likely to outperform cash. Standard Life Investments believes that although property valuations have further to play out in this cycle before they can be described as 'fair value', investors should be tracking a range of recovery triggers which would signal an eventual recovery in the sector. Transaction pricing, the
performance of the listed real estate market and improvements in liquidity and investment flows have all been lead indicators of a recovery in previous property cycles.
Anne Breen, Head of Property Research at Standard Life Investments, said: 'This cycle will be remembered as both the fastest and the largest collapse in commercial property values in the last century. We anticipate further downward pressure in returns for current holders of UK commercial properties over the next 12 months.
'However, longer term investors, particularly those with equity, should begin to analyse the property markets carefully. The UK’s practice of monthly valuations, compared with much less frequent practices in other countries, exposed the excesses in 2007, but could begin to give confidence to those investors looking to re-enter the market at the bottom of the cycle.'
