Concerns about higher inflation and potential rises in interest rates have seen bond yields rise in the last few months. Nevertheless, we think the outlook for bond yields and therefore, property yields, is fairly sanguine. This will mean that property yields can continue to fall in the next two years across the region, although property yields in lower-yielding markets will start to stabilise in 2019. Prospects for economic growth are mostly positive or, at least, improving, meaning that occupier markets will mostly be supportive of capital values. Property performance over the last few years has been similar across the sectors and we don’t expect that to change considerably in the next five years. The retail sector is, however, forecast to produce the best rates of capital growth as it will benefit from the largest increases in prime rental values.
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