This year will see the beginning of a dramatic improvement in the UK property market, with double digit returns predicted by 2015, according to new research.
Experts at BNP Paribas Real Estate’s recent Capitalise event revealed a strong economic outlook for the UK from 2013 onwards as it benefits from the uptick in the global economy. Beyond 2013, the economy looks set to strengthen further, with an average growth of more than 2 per cent predicted between 2014-16.
The average annual return on UK property is tipped to be just over 8 per cent in the coming five years, with a slow start this year gradually gathering pace. Speculative investors are also expected to make a strong return to the marketplace, according to BNP Paribas Real Estate’s head of research Claire Higgins.
“As the underlying economy and accompanying sentiment improves, so will returns,” Ms Higgins explained. “By 2015, when the economy reaches above trend growth, commercial property total returns will rise to above 10 per cent. Retail warehouses and shopping centres will be key drivers in that year,” she told Property Magazine.
BNP Paribas Real Estate’s head of investment Paul Abrey confirmed that “continued global investment into residential” will be a key feature this year, with investors opting for “prime retail opportunities and investment product within the M25, well let to strong covenants.”