UK - The UK's weak economy will dampen returns for commercial property in the fourth quarter, but the asset class should continue to attract institutional investors seeking a safe haven from global volatility, according to PRUPIM.

A recent report published by PRUPIM estimated that total returns for UK property would remain subdued this year, with weak occupier demand outside of central London.

However, it said many international investors continued to purchase best-quality assets in the West End, as they are seeking wealth protection.

Richard Gwilliam, deputy head of research, said: "With the current turmoil in Europe and deepening gloom over the pace of the UK economic recovery, many investors feel good-quality property investments are currently more secure than some equities investments, which continue to be very volatile, and better value than many bonds vehicles."

According to the study, the UK prime property market remains two-tiered, with global money pouring into increasingly expensive central London investments, while assets outside the capital remain cheap.

But the report also found that, as prices continue to rise in central London, domestic investors seem to be increasingly concerned about overpaying for prime assets and are showing greater discernment over what they can buy and pay.

Gwilliam said: "Investor nervousness about the economy and the financial markets has returned and intensified, and prime property - particularly in London - is being viewed as a relative safe haven.

"In fact, prime assets could in many cases be seen as expensive over the long term, but institutional investors will remain wary of all but the best secondary assets for the foreseeable future."

PRUPIM said the office and industrial markets outside of the Southeast region offered the best long-term value in the UK, due to their elevated yields.

While investors have focused mainly on offices in central London in recent months, with prime yields having been driven down to 4% (or even lower) in the West End and not much higher than 5% in the City, most of the pressure has been applied by foreign investors who have been looking for a financial safe heaven and taking advantage of the weakness of the pound.

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