7/10/2011
By Adam Cadle
Institutional investors and pension funds may again turn to investment in commercial property as a ‘safe-haven’ despite the weak domestic economy meaning that returns from the asset class this year will be ‘unspectacular’, research from PRUPIM has found.
In its latest UK Real Estate Perspective Report, PRUPIM highlighted that investment in prime property could be one of the best routes for those looking to combat the current economic turbulence.
PRUPIM deputy head of research and fund manager Richard Gwilliam said: “We expect unspectacular returns from UK commercial property this year, but investors are currently attracted to the unspectacular.
“With the current turmoil in Europe, and deepening gloom over the pace of the UK economic recovery, many feel that good quality property investments are currently more secure than some equities investments, which continue to be very volatile, and better value than many bond vehicles.”
According to the report, the IPD UK Monthly Property Index has recorded positive capital growth at an average rate of 0.2% per month.
“UK commercial property has traditionally provided a return somewhere between bonds and equities, something which it has achieved over the last two and a half years since the stock market trough, and which we think, in the current climate, institutional investors will continue to seek,” Gwilliam added.
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