Following a surge in property yields over the second half of last year, property moved closer to fair value again in Q1. Admittedly, on our measure the all-property score is still sitting in overvalued territory. But that is largely due to the influence of industrial. Indeed, offices and retail are now at, or very close to, fairly valued. And, given a stronger rent outlook, we doubt industrial yields need to rise much further this year. Alternative asset yields fell back in Q1, but have since regained some of that ground while property yields stabilised. That implies valuations will not see much change over the next quarter. But with the 10-year gilt yield set to fall back gradually over the next couple of years, property yields will be able to ease back in 2024 and 2025 without any worsening in valuations.
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