The UK commercial property market is set to rise by double digits (11.5 per cent) in 2014, according to the Ignis property fund team.
The recent Investment Property Forum Concensus Forecast predicts an average total return of 9.3 per cent this year, but Ignis believes the market has the potential to deliver even higher returns “driven by a broadly equal combination of income return and capital growth.”
George Shaw, the manager of the £1.1 billion fund argues that the surge in the market will not result in a property bubble, though.
He acknowledges concerns of a repeat of 2007, but believes that, “yields can sustain a moderate re-rating over 2014, without moving into bubble territory” and that average capital values are currently approximately one-third less than before the crash.
For the period over one year to November 30, the Ignis fund returned 5.6 per cent compared to 4.7 per cent average for the IMA UK Property sector. Over three years to November 30, it returned 10.2 per cent, compared to the sector average of 8 per cent.
