Focus on Low Income Yields, Investors Told

Investors will be able to pick up some bargain properties in the UK commercial market this year by focusing on income yield and selecting assets on property fundamentals....

Investors will be able to pick up some bargain properties in the UK commercial market this year by focusing on income yield and selecting assets on property fundamentals.

According to Alison Puhar, director of UK real estate and portfolio manager for Fidelity's UK Real Estate Fund, explained that unlike 2010 choosing prime assets on low income yields in the hope of further yield compression will not deliver outperformance in 2011, Investment International reports.

The majority of investors are concentrating on tenant contracts and increasingly, but she added that because the anticipated business failures have not happened, tenant default risk is falling and tenants in good quality buildings are still extending and renewing leases.

"Rental growth will be concentrated on the best quality space in core locations but when we look back on 2011 we expect the data to show that the bottom of the market has been passed in a number of the regional markets," Ms Puhar told the news provider.

"As investors realign their expectations for rental growth, price corrections will follow and provide opportunities in these high quality second tier markets,’ she explained."

- Monday 10 January 2011

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