Optimism continues to soar in the UK property sector with total returns of 13.7% now expected this year, reflecting a remarkable 12-month turnaround.
According to the second-quarter Investment Property Forum, UK consensus forecast predictions have strengthened to close to 14% from 12.1% just three months ago.
Looking at the IPF report from this time last year, when cautious optimism was still the byword, shows that the annual forecast for 2014 has almost doubled from 7.4%.
The survey of 28 property advisers, fund managers and equity brokers reveals the bullish responses are driven by rising rents and capital values.
The all-property rental value growth forecast has risen to 2.4% from 2.1% in February.
At the sector level, while offices, industrial and standard retail growth rates have improved over the past three months, once again only offices are predicted to deliver above long-term average growth of 5.8%, up from 4.8% in February.
But rental growth is expected to slow in shopping centres and retail warehouses, where current annual growth rates slipped from 0.5% and 1.1% to 0.4% and 0.7% respectively since February.
Capital growth expectation across all property in 2014 now stands at 7.7%, a jump from 6.2% last quarter, with broad- based growth expected across all property types.
Offices and industrial are likely to be the major drivers of this anticipated performance, where capital growth is expected to remain above the long-run average.
This time last year all-property rental growth was expected to be 1.2% in 2014, alongside capital value growth of 1.4%.
In line with last quarter, the longer-term view shows that growth expectations are sharply curtailed after this year, with total returns dropping to a still- respectable 9.7% in 2015 and 6.9% in 2016.
bridget.oconnell@estatesgazette.com
