European property investment set to offer higher returns than UK

The commercial European property market is expected to offer more returns to investors than the UK sector over the next five years, Scottish Widows Investment Partnership (SWIP) reports.

Overall the organisation expects the commercial property market in the UK to produce returns of seven per cent over the next five years, compared to a prediction of over eight per cent for the same market in western Europe.

In Europe the warehousing sector is anticipated to show the strongest performance, followed by the retail and the office markets.

Contrastingly, office property in the UK is expected to be the market leader in the next five years.

Ian Hally, head of property research at SWIP, said: “The European real estate market has seen record volumes of transactions in 2005 as strong returns and diversification benefits have increased the attractiveness of real estate as an asset class.

“Over the medium term, we expect returns in the European market to be driven by rental growth, providing an average annual return ahead of our forecasts for the UK property market.”

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