Commercial property is still the best performing investment, as sharpening yields boost capital values and total returns, according to research from Lambert Smith Hampton.
Terry Corns, chief executive of Lambert Smith Hampton's Birmingham office, says that commercial property has maintained its position as the best performing asset class so far this year, with total returns in the first four months of the year at two per cent, compared with a return of -0.6 per cent for equities and -0.2 per cent for gilts, and this trend is set to continue.
According to Mr Corns, the General Election seems to have made UK institutions pause for thought.
In the retail market, investment activity was dominated by shopping centres where prime yields are at 5.25 per cent.
On the high street, yields have stabilised at 4.25 per cent, while prime out of town retail parks, where there is both a lack of supply and continuing demand is creating expectation of further rental growth, yields are five per cent.
Market sentiment towards a return to rental growth in the office sector pushed prime yields down by 0.25 per cent to around 6.75 per cent, though for landmark buildings yields of under five per cent were achieved.
The industrial sector has experienced strong demand in both the multi-let estates and distribution sub-sectors with a number of long-let distribution warehouses selling in prime locations at 5.75 per cent.
In terms of rental growth, retail has maintained its position by showing the best rental performance of the three sectors at 3.7 per cent in the year to April.