Setting aside the drag from net exports on GDP growth, Q1 was another strong quarter for both the domestic economy and commercial real estate markets, highlighted by a record first quarter for investment volumes. But occupier demand is slowing in all four sectors (albeit from record highs in industrial) and the sharp hike in alternative asset yields is already squeezing property valuations. As a result, we think that investment totals should slow in H2 and commercial real estate yields, particularly in the apartment sector, will begin to rise.
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