Given the better than expected resilience of the economy in Q1, along with that of the commercial property sector, we have revised our 2021 total returns forecasts from 3.8% in February to now, 6.4%.
Investor demand for supermarkets and industrial assets is driving further downward shifts in yields in those sectors. Although rents across the office segment will decline this year, we anticipate that following the UK’s vaccination roll-out and a phased return to ‘normal’ working practices, employees will start returning to the office which will further boost investor confidence.
We note the key takeaways in this quarter’s Real Estate Investment Forecasts Report below:
- We expect total returns growth of 6.3% in 2021, up from the 2.3% decline recorded in 2020
- Retail rents (with the exception of supermarkets) continue to fall sharply
- Further yield compression in the industrial sector this year
