King Sturge Investment Partner Richard Batten said 'Institutions are having greater confidence in property as an accepted asset class. ' And he expects to see weightings in the sector increase.
However, institutions will have to compete with debt-driven purchasers for stock. With interest rates down to 4% and property showing average returns of 7% to 8%, many forms of property acquisition are now self-financing, Batten noted.
High Street retail and shopping centres are likely to be the best performing property sector in 2002, working off a relatively low base level. However in the office sector, reduced demand in central London and the western corridor is likely to provide a drag on performance, but Batten forecast that this would in part be offset by good overall returns from the major regional office centres.
Batten also forecast that the trend towards the use of synthetic vehicles--like limited partnerships--would continue, and he looked forward to the emergence of an active secondary market. 'The majority of limited partnerships that have been created are likely to be looking to create liquidity and start selling down some of their positions, enabling profits to be taken and releasing cash for further investment,' he said.
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