UK institutions are now net buyers of real estate and retail investors are increasing their real estate exposure, according to Aviva Investors, which is predicting a double-digit UK property performance for 2014-15.
According to the asset manager, UK real estate ended 2013 on a high with an eighth consecutive month of capital growth. At the same time, there was a big rise in demand for real estate debt over the last quarter of 2013, according to a Bank of England report.
“As we enter 2014, we believe the outlook for direct UK real estate continues to look increasingly positive. Growing confidence in the economic recovery bodes well for a gradual return to rental growth across all parts of the market. Reduced macro risks are positive for risk appetite and we expect a strong market in the near term driven by improving fundamentals, further easing of credit conditions and growing investor interest,” said Chris Urwin, global research manager of real estate.
In 2013, the central London-based office space saw above-trend take up and declining availability. More new space will be completed this year but that higher supply was set to coincide with strengthening demand, according to the group.
Additionally, retail occupier markets are still generally difficult with rents continuing to decline in most parts of the sector. However, conditions in central London are very buoyant and rents continue to advance.
