Investors are being encouraged to look towards the commercial property sector.
Like all forms of property, rent will change every year based on inflation rates, and while this is the same for commercial property, the sector enables investors to find buildings that will grow enough in their value to exceed such inflation. The market has particularly been praised for its stability and high returns.
According to George Shaw, manager of the Ignis Property fund, income accounted for 6.2 per cent of the yearly 6.4 per cent return in the past decade, with Mr Shaw estimating that returns would be valued at six per cent for 2013.
Due to the market being less fluctuating as cash, bonds and shares, many have praised the sector. According to the Telegraph, Henderson's multi-asset manager James de Bunsen said: "It's a valuation story – if you look at the cost compared to the income you can get, property looks compelling. Property funds are yielding 4.5 per cent, compared to gilts at around 2 per cent, and corporate bonds at not much higher."
It is easy to see why potential buyers are slightly hesitant however. When the global financial crisis hit in 2007, building prices plummeted causing many investors to seriously lose out. Furthermore, property is particularly hard to buy or sell, with very high transaction costs, and so it cannot be treated like simple equity.
Adding to this, there is a major vacancy rate issue in the UK, with so many empty office blocks on the high street. The problem is so severe that the government is trying to convert them into residential use without any planning permission being needed. It is therefore these risk factors that many will have to consider.
Central London has often been seen as a safe haven for investors, not just in the UK but all over the world. With a weak pound, it is inevitable that many oversea buyers will be trying to take advantage of the current market.