Higher gilt yields put pressure on property valuations

After a marked rise in gilt yields and a fall in real estate yields, property looked relatively more expensive in Q1 than in Q4. Despite this, property sectors still look either undervalued or fairly valued on our measure, except for the industrial sector which now looks slightly overvalued. Further ahead, while we think property yields will stabilise over the rest of the year, we expect further rises in gilt yields will mean relative valuations deteriorate more this year. We are resending all clients a copy of this publication in pdf format due to an issue with our email sent out yesterday, we apologise for any inconvenience.