Total property returns for 2011 will be around 6%, King Sturge has predicted, a drop of around 10% on 2010’s performance.

Speaking at the property consultancy’s annual Property Predictions breakfast briefing morning, joint senior partner Chris Ireland said that behind the overall figure there will be a wide divergence in performance by different property types - with Central London performing strongly.

Talking to Property Week, Ireland also said the banks, specifically Lloyds Banking Group, Royal Bank of Scotland, and NAMA, are likely to step up sales of distressed property throughout 2011.

The performance of the UK market will be against a divided economy and a backdrop of stagflation, King Sturge head of research Angus McIntosh said.

Whilst the UK manufacturing sector is performing well, and the financial services sector returning, increased global costs of food, non-food agricultural products and oil, and increased unemployment will have a negative impact.

In the office sector the divided commercial property market rears its head again with central London outperforming the rest of the UK.

Prime Mayfair and St James’s rents are expected to pass £100/sq ft for the first time since the collapse of Lehman Brothers, joint head of office agency Mark Bourne said. In the City rents of up to £70/sq ft are expected.

In the regions rents will broadly remain stable at around £25/sq ft to £30/sq ft, with Bristol, Glasgow and Manchester best placed for recovery - but cities more exposed to the public sector suffering.

Charles Miller, head of retail at the consultancy, said the double whammy of VAT rises and inflation will focus retailers on saving on their costs - something which may well be focussed on retailers’ occupational requirements.