Commercial property yields at highest level for more than six years
UK prime commercial property yields are at the highest level since October 2013, according to new research from Savills.
Yields shifted outwards by 25 basis points in April and now stand on average at 5.31%, the agent said.
April also saw the lowest monthly volume of deals transacting since November 2008. Around £808m of UK commercial property transacted in April, Savills using PropertyData reported.
UK prime commercial property yields are at the highest level since October 2013, according to new research from Savills.
Yields shifted outwards by 25 basis points in April and now stand on average at 5.31%, the agent said.
April also saw the lowest monthly volume of deals transacting since November 2008. Around £808m of UK commercial property transacted in April, Savills using PropertyData reported.
The majority of these completed deals were already in advanced states of negotiation prior to the UK moving into lockdown.
Meanwhile, vacancy rates in central London offices is also 88bps lower than in 2006, while the rate for regional offices has fallen to 8%. The vacancy rates for industrial and logistics property stand at around 7%, Savills added.
James Gulliford, joint head of UK investment at Savills, said: “If lockdown conditions continue to relax, we expect liquidity to quickly return for prime assets as potential buyers are better able to validate their assumptions on void and rental growth.
“For value-add opportunities it may be a slower process as investors have to contend with more underwriting variables which have the potential to alter pricing, but there’s no reason why yields will not stabilise for sectors where occupier fundamentals remain strong.”
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