"Looking forward, there are clear signs that the office sector will deliver the strongest total returns over the next few years, led by the London City office market," says Stewart Cowe, a property research manager at SWIP. "Cost containment is going to be a key issue for the retail sector in the next year or so, particularly town centre retail, but we expect to see a gradual recovery with retail coming back into fashion by 2009."
For 2006, SWIP forecasts overall returns for the UK property market of 9.9%, following gains of 19.1% in 2005 and 18.9% in 2004. It also forecast an average annual return of 7.1% for the next five years. "Over the next few years, we anticipate more modest returns from commercial property which would place the property in its traditional place between fixed interest and equities," Cowe says.
UK real estate transactions last year were in excess of euro 72.6 billion ($87.2 billion)--a rise of more than 25% on 2004 and its biggest-ever total, the SWIP report adds.
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