Despite the expected increases in interest rates and gilts this year, we expect further mild yield compression driven by the global weight of capital.
Consequently, all-property returns will remain healthy despite slowing from 2021’s six-year high of 16.5%.
Highlights include:
- Expected total returns growth of 9.6% in 2022 and 6.4% in 2023
- Yields will continue to compress this year, especially for retail warehouses
- Despite narrowing, the all-property yield/ gilt spread will settle at around 275bps
- High street shops and shopping centres will see further rental declines over the next two year
- Life sciences and pharmaceutical sectors continue to drive office demand in the ‘Golden Triangle’
- Industrial (+13.2%) and retail warehouses (+12.8%) will record the highest total returns growth in 2022
