The commercial property sector is set to enjoy improved returns in 2013, Legal & General Property's director of research has claimed.
As Rob Martin revealed in a Fundamentals briefing on Wednesday (February 6th), current conditions in the market indicate that prices are expected to stabilise over the coming 12 months - a promising sign following the estimated three per cent fall that took place last year.
With Mr Martin predicting that total yields will most likely be led by income returns - which currently stand at six per cent - it seems that investors are set to experience a slight upturn in their fortunes on the back of a tough 2012.
"Three key drivers underpin our more positive outlook for 2013," Mr Martin explained. "First, central banks look determined to boost growth and this has fed through to our economic growth forecasts, which have been marked higher.
"Second, there is evidence of an easing in commercial real estate credit markets.
"Our third driver for optimism on future returns is the valuation case."
Despite entering a second recession last year, it appears that Britain's economy is set to experience a mild form of recovery in the coming months, albeit a tentative one.
Indeed, with a more positive outlook for the commercial property market, there is the potential for investors to benefit as businesses in various sectors contemplate operating more office space.
Yet Mr Martin also called for caution, explaining that certain asset types offer stronger potential than others while appropriate stock selection will be vital to boosting profit prospects.
Using the capital as an example, he highlighted how the market can be affected by wider factors that need to be considered in order to maximise returns.
"Within London, opportunities to drive strong returns are set to be linked to a far greater degree to transport infrastructure improvements and particular occupier hotspots," he explained.
While there is a sense of cautious optimism in the market, the outlook for 2013 appears to be far more positive than the testing times the sector witnessed in 2012.