Offices to lead sector for next two years

Office space performing strongly, driven by service activity in the UK, but returns expected to fall across the board over the next two years

Offices are set to remain the best-performing property sector over the rest of 2007 and into 2008 though total returns will decline across all areas over the next two years. Andrew Hawkeswood, senior research analyst at Knight Frank, said yields are expected to stabilise, with office total returns likely to reach 13.4% in 2007 and 8.1% in 2008. "The industrial sector is forecast to achieve total returns of 8.1% in 2007 with rental growth steadily improving, albeit remaining low compared to other sectors," he added. "A forecast hardening of yields at the start of the year means industrial...