Aviva Investors believes that 2013 will mark a turning point for the UK real estate market and that secondary assets are set to outperform.

Aviva Investors believes that 2013 will mark a turning point for the UK real estate market and that secondary assets are set to outperform.

The UK-based investor said secondary assets currently look cheap compared to the prime segment, and will drive strong medium-term performance in the UK market.

However, as not all secondary sectors will benefit equally, a selective approach based on sound local knowledge is required, Aviva cautioned.

Anna Rule, UK property fund manager, said: 'Since 2009, while UK prime real estate assets have performed strongly, the performance of secondary assets has been weaker, with cautious investors unwilling to take on greater income risk due to the uncertain economic outlook.

'Over the next five years, we believe that higher yielding sectors will drive the market-wide improvement in the UK. Our research suggests that the premium for holding secondary real estate is at high levels by historical standards and much higher than seen before 2007.'