Richard Batten, Investment Partner at King Sturge said that world and UK economic uncertainty does not favour equities, and increased government borrowing should impact adversely on government bonds. But Property will still be generating acceptable positive returns.
Within the property sector, King Sturge believes that retail will once again be the top performer, with a projected total return of 10%; followed by industrials on 9.3%. But the office sector will be dragged down by falling rents in London and the South East which will mean an annual return of just 6.3%.
"The question is whether yields will be held down by low levels of finance and the weight of money coming in to the market, in spite of pressures for yield to move out due to lower occupier demand and reduced rental growth. We believe current yield levels will be maintained," forecast Batten.
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