ING Real Estate Investment Management has forecast an 11% total property return for 2007.
Reporting the findings of its 2006 annual survey this morning, ING said it was optimistic for the prospects of property investment next year and beyond as cash-rich investors continue to allocate huge sums of capital to real estate.
It predicts another strong year for central London offices, with industrial property coming a close second. Almost two-thirds of survey respondents said they were confident about the market outlook next year and 85% said they intended to maintain their current exposure to the asset class or acquire more property in the next 12 months.
The survey noted an increasing appetite for European property investment, which ING expects to continue as more investors look for ways to diversify their UK portfolios and take advantage of increasing capital values seen in overseas property markets.
Stephen Pyne, managing director and chief investment officer, said: ‘Our survey has found that the total return requirement that the majority of investors are seeking is in the region of 7% – 8%. We expect that property will easily meet this hurdle rate over the next 3 years. Our forecast for 2007 is an 11% total return forecast and an average of 8.9% over the next 3 years.’