Small rise in yields to weigh on returns

Higher gilt yields mean we now expect all-property equivalent yields to rise from 6.6% at end-2025 to 6.9% by end-2030, with half of that rise occurring in 2026. As a result, we now expect all-property capital values to fall by just over 1% in 2026 and rise by only around 1% in 2027, leaving capital value growth at 1.3% p.a. over 2026-30. All-property total returns will average 6.3% p.a. over 2026-30, down from 7.1% p.a. in our previous forecast round, although higher-yielding sectors – particularly retail – should continue to outperform.