Aviva Investors lowers return forecast for 'subdued' UK real estate

From 8.7% to 6.6%

Aviva Investors has reduced its total return forecast for the UK real estate sector in 2016 from 8.7% to 6.6%, as a "subdued" property market continues to lead many real estate investment trusts (REITs) to trade at a discount to their net asset value.

The company revised its growth forecast as total returns for UK real estate have continued to lose momentum in Q1, with the IPD UK Monthly Index showing all property returns at 1.1%; their lowest quarterly reading since 2012. Additionally, Aviva Investors has adjusted its per annum forecast return for the period between 2016 and 2020 for the sector down to 5.1%, with particularly weak growth expected from prime London offices and retail. Richard Levis, global real estate analyst at Aviva Investors, said weaker returns for the sector had been expected, but noted transaction volumes in ...