Despite vacancy rates going up around the UK, retail properties are still the most favoured asset for investors, according to a new study.
Colliers International’s Property Pricing Survey March 2011 revealed that 64 per cent of investment community favoured retail assets, 43 per cent preferred offices whilst 36 per cent chose industrial builds.
Central London and the south-east were the most popular regions for buying, favoured by 50 per cent of respondents, whilst places to dispose of retail properties were concentrated outside of this area with Wales, the north-east, the north-west, Scotland and Yorkshire & The Humber each being chosen by 29 per cent.
With both rental and capital growth expected to rise across almost all sectors in the next year, property is still hugely favoured by investors but there were worries among respondents.
The report said: “79 per cent of respondents said that it was property’s attractive yield and relatively high income return that was a key attraction to the sector.
“However, some participants expressed concern. One respondent said it was getting harder to justify investment in property and another said that property investment supply and activity was constrained to the prime markets.”
Rental growth in shop units is set to rise 1.4 per cent per annum in 2012 compared to a fall of 0.1 per cent this year and capital growth in this sector is expected to grow from minus 1.5 per cent in 2011 to a growth of 1.3 per cent next year.
The report also said: “The survey shows that respondents expect rental growth prospects for 2011 to improve over the November 2010 survey across all sectors except for business parks (-30 base points).
“The average improvement across all sectors was 20 base points. The greatest change was seen in shopping centres with an 80 base points improvement, followed by retail warehouses and offices - each seeing a positive 60 base points change.”
Although 71 per cent of respondents saw the rise in ten-year UK government gilt rates as a downside risk for property, 50 per cent said that their property investment risk appetite had not changed.