We have entered a transition phase where the strong inward yield movements we have seen across most sectors over the past 18 months have come to an end.
Investor caution appears to be an inevitable consequence of high inflation, rising interest rates and wider concerns about the growth trajectories of the global economy.
Although all property yields will end 2022 at roughly the same level as they ended 2021, this is a consequence of strong compression during H1 followed by outward shifts in H2.
Highlights in our Q3 report include:
- We downgraded our 2022 total returns forecast from 12.0% to 5.9%
- All property rental growth to slow from 3.8% in 2022 to 2.9% in 2023
- Property yield/gilt spread to settle at around 300 bps
- We expect all property yields to shift out by 26 bps in H2
- Retail warehouses will be the best performing asset type in 2022