Investment director at Heartwood Investment Management, Alan Snippets, reported in the UK property section earlier this week that the UK property sector was able to comfortably outperform all the major asset classes in the year to date. Amidst going through a lot of pressure last month, the sector was able to pull itself back up, and stayed on track.
World Property Journal then highlited the report stating that: "as the cycle continually matures, numerous questions are being raised." One of the concerns being discussed is whether UK properties would be capable of continually delivering the strong returns that several investors have been accustomed to since 2013.
It was then added that potential investors of higher UK interest rates will most definitely create more volatility than what was projected on the recent years. This being said, investors will have to be more selective in terms of their investment choices. UK residential properties are threatened of rate increases and decreases in international flows. The decrease is caused by the slowing Asian growth and the emerging market's currency weakness, which is an argument that some parts if the property markets are being valued.
Alan Snippet's preference remains on the office and industrial spaces that are easily accessed, but his views on UK's commercial properties remains positive.
As per the office and industrial spaces, Snippet is expecting positive momentum which is said to be supplied by two principal drivers which are:
Rental Growth- it is said that the income property will be an important contributor to future returns, this would only be possible however if there is limited room for capital growth.
Ongoing International Investment Demand- as rental growth continually increases, it can actually be a key attraction for income. It seeks global investors in a low interest rate environment.