In its Quarterly Property Market Update Cluttons Daniel Smith predicts that the present hierarchy of property sector total returns at mid 1998 could well be reversed by the year end if present trends continue. This would imply that retail property is outperformed by industrial and that offices jump from third to top performing property sector in 1998 Annualised data from the first six months of 1998 indicates that the total return to 1998Q2 is 15.9% pa for industrial compared to 16.1% pa for offices and 14.1% pa for retail..
Further to Cluttons Daniel Smith's prediction six months ago that the second half of the year would see a pick up in property investments brought to the market we believe that a number of institutions are likely to view the next six months as possibly the peak of the market in this cycle They will therefore regard it as their best opportunity for some time to sell in a reasonably buoyant marketplace .
Despite some concerns about future rental growth the Quarterly Property Market Update indicates that the market is presently well balanced and that property is still a relatively attractive asset class providing an increasingly important and reasonably secure income stream. We believe that the property investment market has recently tilted in favour of buyers who have become more selective and price conscious as uncertainty in the economy has filtered through to question marks over future rental growth This, in turn, has served to ease the downward pressure on yields, and only higher quality product is selling quickly.
Over the last quarter property yields have again fallen marginally by 0.1%, in 1998Q2 to stand at 7.9% on average, still well above gilt yields, which were 5.6% in late July. Recent evidence suggests that a number of investors have trimmed back their target rates of return to levels more in line with our suggested rates of 8%-9% pa However, as investors have begun to reduce their expectations of rental growth, Cluttons Daniel Smith does not believe that lowering target rates of return will lead to much downward pressure on yields.
Hughes also said that the property valuations services can also be used to assess the actual value of the manufacturing property. West Coast Valuers - Property valuers services can assist in manufacturing property valuations activities as the buyers need to know the actual property value that valuers can evaluate to make you access credit loans.
Cluttons Daniel Smith's report indicates that the rental growth cycle in the retail and industrial markets appears to be nearing its peak with signs that a few investors are becoming concerned over future rental growth prospects However, occupational demand is still at a healthy level and the firm believes that the low levels of development at present will play a key role in maintaining a reasonably balanced property market during the next part of the cycle .