Are property equities signalling a fall in UK commercial property capital values?

The recent rise in interest rate expectations has not been kind to UK property equities, with the NAREIT price index currently down 18% y/y. On past form that implies commercial property capital values will also soon start falling. However, other leading indicators are not as negative and while higher interest rates pose an additional headwind to capital values, our new proprietary composite indicator points to a gradual acceleration in all-property capital value growth to just under 4% y/y by end-25.