Filtered by Subscriptions: UK Commercial Property Use setting UK Commercial Property
All-property total returns have turned the corner, with a month-on-month rise in January and February. Rental growth is set to continue to ease, but yields are close to a peak and that will remove the downward pressure on capital values over the next …
19th March 2024
Another rise in all-property yields in Q4 helped valuations improve slightly. But on our measure all-property still looks substantially overvalued. Looking ahead, a fall in alterative asset yields will help valuations gradually improve this year, but they …
8th February 2024
Property yields rose further in Q3, but with risk-free rates now falling back, we think they will stabilise in the first quarter of 2024. But given historically narrow yield spreads, we doubt we will see much yield compression ahead either. As the economy …
24th January 2024
Property yields rose further in Q3, but with risk-free rates now falling back, we think they will flat-line in Q4. That will help stabilise capital values, but given historically narrow yield spreads, we doubt we will see much yield compression ahead. As …
18th December 2023
After a brief respite earlier this year, property yields are once again on the rise, driven by a further increase in gilt yields. We don’t expect a repeat of the surge seen last year, but we also think any compression beyond this year will be minimal as …
19th October 2023
22nd September 2023
Our latest chart pack on the UK commercial property market is embedded below. Higher-than-expected core inflation means interest rates are now set to be higher for longer and we still think the economy will enter a mild recession later this year. That’s …
20th July 2023
All-property yields have seen no movement for the past two months and combined with resilient rental growth that means capital values have held firm since March. (See Chart 1.) But stubbornly high inflation has led to a resurgence in interest rates and …
22nd June 2023
All-property yields have stabilised since the start of the year and alongside continued rental growth, that means total returns were more-or-less flat during Q1. (See Chart 1.) But, while the worst is over, the economy is still set for a mild recession, …
28th April 2023
Yields have stabilised since the start of the year, with the 8bps rise in equivalent yields over January and February much smaller than the 64bps increase over the final two months of 2022. (See Chart 1.) And with the UK not as exposed to the banking …
30th March 2023
Yields have continued to surprise on the upside, with the all-property equivalent yield rising by 106bps in the three months to December. That matches the worst months of the GFC, and even though rental growth has held up capital values ended the year …
27th January 2023
While we had expected the rise in risk-free rates and upcoming recession to boost yields, the speed at which they have increased has been surprising. All-property equivalent yields rose by a total of 78bps in October and November, reversing all the …
20th December 2022
Total returns see worst month since Brexit vote The rise in interest rates and upcoming recession are leading to a rapid turnaround in commercial property performance. Rental growth is starting to ease, particularly in consumer-facing sectors such as …
21st October 2022
All-property yields saw a large rise in August, as concerns around valuations increased. (See Chart 1.) And, with the energy support package set to boost interest rates and the economy probably already in a mild recession, yields will see further …
22nd September 2022
With inflation now set to rise to 12% by October, interest rates on the rise and the economy on the brink of recession, the 21-month streak of yield compression is at an end. (See Chart 1.) Coupled with subdued rental growth, that means all-property total …
22nd July 2022
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 …
22nd June 2022
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 …
22nd April 2022
Commercial property is not showing any signs of slowing down. Rental growth rose further in February, while annual total returns climbed to a level last seen in Q4 2010. Industrial remains the main driver behind overall performance, with retail also …
18th March 2022
#Commercial property ended last year strongly. Annual rental growth climbed to a five-year high, while annual total returns crossed the 20% level. This was largely the result of dynamism in industrial, though all sectors saw positive annual returns, even …
21st January 2022
Commercial property’s recent good run continued in October. The annual rate of rental growth surged ahead after only breaching positive territory for the first time in almost two years during August. However, given the economy’s headwinds over the near …
3rd December 2021
September was another good month for commercial property, with the first year-on-year rental growth recorded since the onset of COVID-19. But as clouds gather over the economic upturn, we suspect that the real estate recovery will also struggle to …
22nd October 2021
The recovery in UK commercial property continued into August, despite a backdrop of more equivocal economic data. But, while the economic softness should be short-lived and returns for 2021 are likely to remain healthy, we suspect that the real estate …
24th September 2021
The acceleration in all-property capital growth in June reflected a sharp fall in yields and strong rental growth. But, even as a fast economic rebound boosts occupier demand in the coming months, we think this rate of growth in values will not be …
23rd July 2021
The improvements in all-property rents and capital values continued in May, supporting our view that we are at the start of a slow recovery in property. Looking ahead, with non-essential retail and most of leisure now open, and the final restrictions …
18th June 2021
Capital growth was solid in April at 0.5% m/m, although that reflected a slight reduction from the rate seen in March. Looking ahead, we expect the recovery in economic activity to continue which will support demand for commercial property. However, …
28th May 2021
A turnaround in returns during March hinted at a brighter outlook, though this mainly reflected favourable base effects. We think both structural and cyclical headwinds remain and do not see this as the start of a sustained recovery. With restrictions …
21st April 2021
After stabilising at the start of the year, all-property capital values grew slightly in February. But we don’t think this spells the start of a sustained recovery over the next few months. After all, virus restrictions are only expected to unwind …
18th March 2021
The rise in all-property capital values in late-2020 proved short-lived and they flattened off again in January. The recent roadmap for easing England’s current lockdown is broadly consistent with our previous expectations for the recovery, so the outlook …
25th February 2021
A return to rental growth and stronger capital value growth in December hint to a turnaround in UK commercial property. But this was a surprising development and we think it is too early to call the recovery given the headwinds in early 2021. With virus …
22nd January 2021
Rental falls slowed and capital values returned to growth in November, suggesting that we may be too pessimistic in predicting further falls in values. But, with tight virus restrictions remaining and structural shifts weighing on the rental outlook, we …
18th December 2020
With rental and capital values falling at a slower pace in recent months, this had seemed to suggest that pricing was bottoming out. But the near-term outlook for most commercial property sectors has been dampened further by the second lockdown. We expect …
30th November 2020
A faster deterioration in office rents meant that all-property rental values fell at a quicker pace in September. As a result, with yields stable, all-property capital values declined less steeply. But with the rental outlook worsening amidst further …
23rd October 2020
Though the slowdown in the pace of rental and capital value falls in recent months seems to suggest that pricing is stabilising, we expect there will be further upward pressure on yields this year. After all, the rental outlook has deteriorated. And with …
25th September 2020
Rents and capital values fell at a slower pace in July than was recorded in June. But, while values seem to be approaching a degree of stability, we expect a deterioration in the rental outlook will put renewed upward pressure on yields. Total returns …
27th August 2020
Although there were further signs of stabilisation in June, we expect that the slow recovery in the economy will continue to put upward pressure on yields in the coming months. Meanwhile, rents fell by 0.4% m/m in June, the same pace as the previous …
27th July 2020
While rental values fell sharply in May, this was in part offset by yields increasing at a much slower pace than the previous month. In turn, this led to a less steep fall in capital values, but annual returns remained negative. As the negative impact of …
26th June 2020
Yields rose again in April and there is more of the same to come over the summer months. While rental values fell slightly, the rise in yields meant that capital values declined by 1.8% m/m in April. This saw annual returns turn negative for the first …
29th May 2020
Early signs of the impact of COVID-19 on property were seen in the MSCI monthly data for March. While rental values did not see much of a deterioration, yields saw their biggest rise since after the EU Referendum in 2016, causing capital values to fall by …
29th April 2020
The rise in yields in February suggests that even before the disruption from coronavirus worsened, investors had become more cautious. In the coming months, we expect this to hit transactions hard. As a result, yields are likely to rise at a faster pace …
27th March 2020
A rise in all-property yields caused capital values to decline by 3% y/y in January. Although we expect yields to rise and rents to edge lower in the months ahead, the rate of decline in capital values is set to slow later this year. Economic indicators …
2nd March 2020
Annual returns were just 2.1% in December, the lowest monthly figure since 2010. A marginal rise in yields in the retail sector caused all-property capital values to fall in December and was exacerbated by a slight fall in all-property rental values. (See …
29th January 2020
The marginal increase in rental values in November was not enough to prevent capital values from falling on an annual basis. Indeed, the impact of rising yields, particularly in the retail sector, caused all-property capital values to fall by 2.9% y/y. …
20th December 2019
Capital values have been falling since late 2018 (See Chart 1.) This has led by declining retail capital values and slowing growth in office and industrial. We expect that all-property yields will continue to rise next year, driving further declines in …
22nd November 2019
This rise in all-property rental value growth in September was not enough to prevent capital values falling on an annual basis for the fifth consecutive month. (See Chart 1.) The fact that the chance of a no deal Brexit has reduced is positive for the …
25th October 2019
In August, stronger rental value growth in the office and industrial sectors meant that annual all-property rental value growth held steady. (See Chart 1.) This is consistent with the recent improvement in economic activity, following the contraction in …
26th September 2019
Although there have been signs that economic activity has improved in Q3, the slowdown in the commercial property market looks set to continue. In July, all-property rental values barely grew and yields rose across most sub-sectors. (See Chart 1.) …
27th August 2019
Our view that the commercial property downturn has further to run was backed up by a pickup in the pace of decline in all-property capital values in June. However, at the halfway point in the year, industrial returns continue to outperform returns on …
24th July 2019
The downside risks to economic growth and property returns this year appear to be rising. Political and economic developments in May have increased the chance of a deterioration in global conditions and a no deal Brexit. Further, the falls in retail …
26th June 2019
