A combination of unrelenting strong demand for industrial assets, signs of a pick-up across office market activity and increasing interest for supermarkets and retail warehouses will result in a 50 basis point decline in all property equivalent yields by the end of the year.
Total returns will therefore reach a seven-year high of 14% in 2021, more than offsetting the moderate decline recorded in 2020. We expect some further modest yield compression in 2022, although not to the extent witnessed this year. In this quarter’s REIF, we highlight
- Industrial total returns will reach more than 30% this year, the sector’s best performance since 1988
- Annual investment volumes are on track to reach £60 billion
- Operational assets are in high demand, with investment in residential and medical assets above average and hotel demand improving on 2020 levels