Commercial property is back in fashion, a recent survey by Aberdeen Asset Management found that UK pension funds are actively looking to increase their commercial property exposure.
There is currently a shortage of prime office space in the city, and new buildings like the Heron Tower will probably be fully let before completion.
The recovery in commercial property values seen during the past nine months is slowing but analysts say that funds investing in the sector have become increasingly attractive for their income yields.
Commercial property values rose by just 0.8 per cent in April - half the growth rate achieved in March, according to the latest figures from the Investment Property Databank (IPD), the benchmark property index. This monthly growth rate was the lowest since values started rising again last August. Since then, capital values have rebounded 14 per cent following a two-year fall of 45 per cent.
The property sector remains far from healthy, but is looking like an increasingly attractive addition to a portfolio.
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