Prompted by increasing tenant demand and service sector employment growth, investment in UK commercial property is expected to produce a total return of 11.9% this year - up from the previous estimate of 10.5%. That is according to a new report released by Scottish Widows Investment Partnership (SWIP).

However, commercial property is set to offer a slightly lower return over the four years after 2005, with returns expected to come in at an average of 7% per year, according to the units property research manager Stewart Crowe. He also claims that the office sector should prove the best form of property investment.

He says: "Tenant demand picked up in 2004 in an increasing number of office markets and rental growth is forecast to increase over the coming years. Property has performed strongly as an investment sector in recent years, stirring renewed interest from pension funds burned by the end of the dotcom equity boom."