SWIP's latest research asserts that the retail-rental cycle is close to its peak and, after three years of superior performance, the outlook for the sector is deteriorating as consumer spending and housing price increases slow down in the wake of successive interest rate hikes. This will translate into lower total returns of 6.9% in the retail sector in the three years to 2007.
The outlook for the office sector is rosier, with improved sentiment in equity and bond markets feeding an increase in tenant demand for office space in central London. SWIP's total return forecast for the office sector to 2007 is 10.2% a year. "With the improving central London economy acting increasingly as a stimulant to growth in the office sector, we are forecasting office rental growth to outperform other sectors this year," Cowe adds.
Rental growth has also returned to the UK industrial sector, which is influenced by manufacturing. Industrial property is expected to benefit in the short term, at least until slowing global economic growth begins to hamper the export led activity, which is not expected to occur until around mid-2006. SWIP's total return forecast for the industrial sector to 2007 is 8.9%.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to asset-and-logo-licensing@alm.com. For more inforrmation visit Asset & Logo Licensing.