Senior analyst Guy Weston said: "The slowdown reflects a more cautious attitude amongst UK institutional funds in response to a further weakening in tenant demand." But he forecast that he market would pick up again in 2004, with returns averaging 8.2% per annum over the next three years and a return to double-digit returns in 2005..
The office sector is expected to be the worst performer over the next two years with a forecast total return of 3.0% in 2003, while industrials will be the best performer. A further polarisation of yields is expected in 2003. Stock with short-term income streams will continue to attract less investor interest, whilst units with lease terms of 15 years or more will be more in demand.
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