According to the latest report from IPD Global Intel, which provides analysis of the real estate sector, the asset class averaged global returns of 8.4 per cent in the past four years to October 2014, and pricing has returned to levels last seen in 2007-08 in many markets.

The sector has seen increased interest from the investor community, as the most recent monthly statistics from the IMA show. In September 2014, property was the best-selling asset class, with net retail sales of £315m.

The IMA reveals that the last time it was the top-selling asset class was in March 2007, when it clocked up net retail sales of £473m.

The IMA data also shows that property was among the top three best-selling IMA sectors for ISAs based on five fund platforms during the month of September, totalling £41m in net sales.

Peter Hobbs, head of real estate research at MSCI, comments on the performance of real estate in the IPD Global Intel paper. He says: “The strong performance of recent years has continued into 2014.

“In three markets (UK, US, Ireland) for which a quarterly series is available, annualised returns in the second quarter of 2014 ran at double-digit levels.

“Although many markets continue their strong run, others continue to lag, certainly to the end of 2013.”

Mr Hobbs points out that in general, Asian markets have performed far more strongly than European ones. But he warns that “increasingly aggressive” pricing of markets is a risk for real estate investors, particularly amid rising bond yields.

Mr Hobbs continues: “The IPD Pricing Indicator across all markets in the IPD Global Index shows that real estate is more aggressively priced than at any time over the past five years, but not as severe as the peak years of 2007-08.

“This indicator represents the average across all markets and conceals more aggressive pricing for some markets, particularly Canada, UK and the US.”

Stewart Robertson, senior economist at Aviva Investors, adds: “The outlook for global real estate remains robust, as occupier market fundamentals continue to improve, with most prime markets seeing continued rental growth and lower vacancy rates.

“Property continues to offer good value relative to other asset classes and is attracting more equity. Meanwhile debt is becoming both more readily available and cheaper in most markets.”

But he adds: “As a cautionary note, however, investors are at risk of overpaying for prime assets in core markets.”

So how should investors allocate to property in the current environment?

Mr Hobbs explains that any variations in the performance of the asset class are a reflection of shifting capital-flows across property sectors and countries.

He advises: “Investment allocation choices involve overweighting more strongly performing countries and sectors and underweighting the laggards.

“The more volatile UK and US markets, as well as the commodity-oriented markets of Australia and Canada, contributed to stronger relative performance over recent years, while the markets in Continental Europe (and the office sector in general) weighed on global performance.”

Ellie Duncan is deputy features editor at Investment Adviser

Key figures: property in numbers

8.4%

Average global returns from real estate sector over the past four years. (Source: IPD)

11.4%

The annualised total return from industrial property to the end of 2013. (Source: IPD)

£315m

Net retail sales of property as an asset class in September. (Source: IMA)