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15 Jan 2014

Investors Advised To Focus On Commercial Property

Investors should focus on commercial property in 2014, as industry experts predict that commercial property funds will deliver solid returns on investments, reaching a double-digit value.

Private investors should realise the potential of the sector, with UK commercial property particularly attractive, according to analysts and fund managers, as quoted by the The Telegraph. Commercial property funds have traditionally been a preferred asset for investors due to the relatively low risk associated with them. However, with the onset of the financial crisis in 2007, returns fell dramatically, and investors have been overlooking the sector over the past few years.

But tables appear to have turned, as last year´s total return on commercial property came in at 8.9%, according to the IPD UK Commercial Property Index. Experts predict that over the course of 2014, returns from certain funds may exceed 10%. Since returns on commercial property include income from rent and potential increase in the value of the property, the fact that demand keeps pushing prices up is welcome for investors.

Analysts predict that in 2014, returns will be evenly split between capital growth and income. This development is set to bring about significant changes to the market because capital growth has been lagging behind income since 2007. Meanwhile, property capital values remain about almost one-third below the peak recorded before the beginning of the crisis, The Telegraph reported.

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