What Next for the Property Market?

Residential property prices are expected to cool off in 2015. But after a stellar 2014 what are the prospects for investors in commercial property over the next 12 months?

Andy Brunner 8 January, 2015 | 3:38PM

This article is part of Morningstar’s Guide to Investing Ideas for 2015, our comprehensive round-up of where the most promising stocks, funds and markets can be found this year.

UK commercial property looks set to be the best returning asset class in 2014 with overall gains for the IPD All Property index likely to be just a little below 20%. Following on from double digit returns in 2013 the scale of the rise surprised many commentators. Given the substantial fall in property yields over the two years, what are the prospects for 2015?

Before looking more closely at the outlook for the coming year, it is worth remembering the tremendous importance of income to UK commercial property total returns. Indeed, over the period 1987 to the end of 2014, the IPD All Property index has produced a total return of 900%, of which, income has contributed nearly 80% and capital values just 20%.

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About Author

Andy Brunner

Andy Brunner  is Head of Investment Strategy, Morningstar UK

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