The UK commercial property market will rise by 11.5% in 2014, more than 2% higher than expected, according to forecasts from the Ignis property team.
While the most recent Investment Property Forum Consensus Forecast predicted an average total return of 9.3% this year, the team think the actual figure will be higher, 'driven by a broadly broadly equal combination of income return and capital growth'.
He acknowledged concerns there would be a return to over-inflated property prices like those seen in 2007, but suggested 'yields can sustain a moderate re-rating over 2014, without moving into bubble territory' as average capital values are currently 30% less than before the crash.
Over one year to November 30, the Ignis Commercial Property fund returned 5.6%, compared to a 4.7% average for the IMA UK Property sector, making it third quartile, albeit in a peer group distorted by property shares funds. Over three years to November 30, it returned 10.2% compared to a sector average of 8%, making it second quartile.