Carter Jonas is predicting total returns from commercial property will fall to 8.8% in 2016.

This contrasts with total returns of 13.4% this year. The property consultancy said yields were at or approaching previous lows and that capital value growth was unlikely to drive returns as it has done in recent times.

Jeremy Gidman, head of investment and asset management, Carter Jonas, said: “The party of yield compression is largely over – yields are back to their 2007/2008 peak in most areas of the market, and we are unlikely to see yields hardening much further in 2016 due to wider economic conditions.

“The fact that rental growth is coming through more widely should help to sustain the investment market, although it is difficult to see the volume of transactions in 2016 matching the record level we have witnessed this year.”

He also predicted a greater divergence between prime and secondary retail as large numbers of 25 year leases entered into in the early 1990s come to an end.

In central London, the firm predicated that although further yield compression was unlikely, shortages of office space would continue to drive strong rental growth and push total returns up towards double digits. The hotspots in the market could also shift.

Darren Yates, head of research, Carter Jonas, said: “There is a growing sense that parts of central London are expensive and growth will shift towards emerging locations such as Victoria, Battersea and Stratford, as occupiers seek more cost-effective solutions.”

With development yet to pick up in the regions and with steady occupier demand, he also predicted another good year for city centre office markets in places like Birmingham, Manchester and Leeds.

The firm was also positive about the fundamentals of occupier demand and supply in other markets such as industrial and residential.

However, Yates warned that the market could still experience a slowdown.

He said: “Activity may also cool, against a backdrop of the EU debate and the prospect of higher interest rates. It should also be remembered that, seven years after the financial crisis, the market is approaching its natural peak in the cycle.”