Property outperformed both the FTSE 100 and gilts in the first quarter of 2015.
Global real estate firm Colliers International has forecast more yield compression of 30 basis points (bps) by the end of the year.
The company has predicted stronger occupier markets in 2015, with all-property rental growth up by 4.2 per cent a year, total returns at 13 per cent a year, and capital growth of 7.5 per cent a year.
Walter Boettcher, Colliers International research director and economist, said: “Though London is still perceived as a safe haven, it was evident in Q1 2015 that increasingly international investors have been tempted away from the South East and into the northern regions where yields are higher.”
Mr Boettcher said the office market is set to be the strongest commercial property asset class for 2015.
Clayton Cumming, a partner with Glasgow-based Advice & Wealth Management Solutions, said: “As part of a diverse portfolio, property does play a part but the thing is that there are costs such as tax.”