The credit crunch has made retail property an ideal investment, research by DTZ has said.

The global property firm said the summer marked a major turning point in retail property performance and that retail property is now the cheapest it has been for 25 years.

Historically, the research based on IPD figures says, retail property has enjoyed a yield premium reflecting that the sector had better rental value growth than the office and industrial sectors.

But following the downturn, income returns available on shops and centres matched those for all property at 4.6% for the first time since 1980.

A bright future.

The erosion of the yield premium, says DTZ, has led to retail property values plummeting – but the future of the retail sector is still bright.

‘We predict retail property will be back on top in less than three years,’ said Mark Williams, head of retail capital markets at DTZ. : ‘If rental growth recovers, to even half its previous superiority, then the retail sector could prove within two or three years to have been undervalued and oversold.

‘For investors, this means there could be longer term opportunities on offer from asset mis-pricing, and in the meantime, careful asset management will be essential to generating income.’

Williams said much could depend on interest rate policy.