Savills News

UK commercial property yields hold steady

UK commercial property prime yields remained stable in June 2019, according to international real estate advisor Savills, despite wider macro-economic headwinds in the market, with the all-property average prime yield currently at 4.87%, only a slight change on the 4.83% seen at the end of April. 

Savills says that none of the 13 commercial property sectors it monitors saw prime yields move out in June, although several associated with the retail sector are seeing some pressure to increase in the short-term.

£17.3 billion was invested in UK commercial real estate in the first half of 2019, says Savills, with overseas investors accounting for 42% of investment by volume, close to the 46% annual average seen over the last three years. Savills research shows that the share of investment from US and Middle Eastern sources into the UK was higher in H1 2019 than the historic average.

James Gulliford, joint head of UK investment at Savills, comments: “UK commercial property has remained attractive for investors both international and domestic despite ongoing discussions over the UK’s future relationship with Europe. The diversity of asset classes and regional markets means that the country has continued to be a destination of interest to a range of investors whether they be opportunistic, long term or for development purposes. It is difficult to predict what will happen in H2, however there may be significant opportunities for developers and those looking to capitalise on a currency play.”

Steve Lang, director in Savills commercial research team, adds: “UK commercial property is still recognised as a safe destination for capital on a global stage. While some sectors are showing indications that yields may soften, others remain resilient; in particular, there are positive rental growth prospects in a number of regional office markets which continue to offer good value.”

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