The outlook for the commercial property market has improved for another quarter, according to the latest Investment Property Forum (IPF) Consensus Forecast survey.
The survey, which vets the opinions of 30 advisers, fund managers and brokers on a quarterly basis, shows that the forecast total return for 2010 climbed from 10% in November to 13.4% in February.
However, IPF head of research Louise Ellison said that predicted total returns for 2011 had moved down from 9.4% to 6.6%, indicating an expected dip in performance.
In the survey’s first look at 2012, stronger total returns are anticipated, supported by a return to positive rental and capital value growth.
Capital values are expected to climb 5.9% this year, but to fall 0.6% in 2011, before rising again by 2.3% in 2012.
By sector, offices are expected to show the sharpest improvement, with standard shops emerging as the laggards of the market recovery.
“Capital value growth forecasts for offices have improved sharply from 1.2% to 6.1% for 2010,” said Ellison. “The sector is now expected to show the best capital value growth performance in 2010, having been forecast three months ago as the poorest performer for this period.”
Despite more optimistic total returns and capital growth figures for property, there is no expectation of an improvement in rents until 2012.
Full results of the survey, p48
