Higher yields in prospect across all sectors - Capital Economics
UK Commercial Property

Higher yields in prospect across all sectors

UK Commercial Property Outlook
Written by Capital Economics Economist
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With Brexit delayed, occupier demand is likely to be soft this year and interest rates lower for longer. However, our working assumption is that a deal will be struck this year. In turn, we expect the outward shift in property yields, which has already begun, to continue into 2020 and 2021 as rising interest rates and bond yields put pressure on yields. Nevertheless, a recovery in economic growth will support rental values and prevent capital values from declining more sharply. In the event of a no deal Brexit, capital values would fall relative to a weak baseline, but even so we would not expect the property sector to experience a hard landing.