Investor demand for UK Commercial Real Estate will remain strong given the global weight of capital and the fact that bond yields will remain subdued.
Consequently, at the all property level, equivalent yields will be relatively stable this year as further outward movement across the retail and leisure sectors contrasts with mild compression across the industrial and office market segments. Although the economy will suffer a decline in Q1, GDP is expected to expand substantially in Q2.
- Following a 2.3% decline in 2020, all property returns will grow by 3.8% in 2021 and 6.3% in 2022
- Supermarkets and industrial assets will perform particularly strongly as yields remain firm and rental growth is maintained
- Although average office rents are set to fall in H1 2021, prime stock will prove more resistant to downward rental pressure
