Alan Sippetts, investment director at Heartwood Investment Management, says that UK commercial property should remain positive next year, and investors should target ‘niche’ areas of office and industrial space.

Sippetts adds: “UK property has comfortably outperformed all other major asset classes in the year-to-date, although the sector has been under pressure over the last month. Inevitably, as the cycle matures, questions are being asked as to whether UK property can keep delivering the strong returns that investors have become accustomed to seeing since 2013.

“Prospects of higher UK interest rates will undoubtedly create more volatility than we have seen in recent years and investors will have to be more selective in their investment choices. The threat of higher rates and waning international flows into UK residential property, due to slowing Asian growth and emerging market currency weakness, argue that some parts of the property market are fully valued. However, this pessimism has spilled across the broader sector and in certain areas it appears overdone.”

Within the office and industrial space, Sippetts expects the positive momentum to be sustained by two principal drivers – rental growth and continued investor demand from overseas.