Are clouds forming over the UK property investment outlook?

With commercial property capital values stabilising and credit conditions easing, the stage was set for a decent recovery in investment this year. However, the recent rise in gilt yields has cast a shadow over the outlook and a fall in UK REIT pricing suggests investors are taking a more cautious view. Transactions are therefore likely to remain subdued over the first quarter. However, we still think the 10-year gilt yield will fall back to 3.75% by end-26, which will help drive investment volumes to over £50bn in 2026.