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Retail yield compression surprises in March

The latest monthly MSCI figures indicate that commercial property is holding up well. Rental growth rose further in March, while annual total returns matched July 2010 levels, which were the highest since Q3 1994. Industrial continues to be the driving force, but retail is also delivering a handy contribution. But we expect the current pace of growth will cool down as structural change weighs on occupier demand and yields stabilise. We therefore expect annual total returns to slow to 8-9% by end-2022.
Pieter Du Preez Property Economist
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24 June 2022

UK Commercial Property Chart Book

Signs of a slowdown emerging

Annual all-property rental growth reached a five-year high in May, while returns rose to levels last seen in mid-1994. But signs of a slowdown also emerged, especially in the red-hot industrial sector, where capital value growth and total returns eased for the first time in almost two years. In addition, the recovery in retail and offices lost some steam, with monthly rental growth rates nudging lower. We expect the pace of growth will let up soon as yields start to stabilise and structural changes weigh on occupier demand. As such, we expect returns to cool to below 10% by end-2022.

22 June 2022

UK Commercial Property Update

Will Manchester office rental growth outperform again?

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17 June 2022

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Pandemic provides a boost to life sciences centres

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14 April 2022

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How worried should property be about higher rates?

Rising interest rates have put the outlook for property prices back under the spotlight. But, with lending practices much more restrained in this cycle and the market level loan-to-value ratio well below 50%, we don’t feel overly concerned at the prospect of a repeat of the last cycle. That being said, we continue to think that rising interest rates will limit capital value growth over the coming years.

7 April 2022

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S&P Global/CIPS Construction PMI (Mar.)

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6 April 2022
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