2022-07-13-莱坊-Investment_Yield_Guide_July_2022_4页_440kb

Knight Frank Prime Yield Guide Summary - July 2022

Overview

This Prime Yield Guide from Knight Frank Intelligence, dated 12 July 2022, provides indicative data on prime real estate yields for various market sectors, based on rack rented properties and disregarding bond type transactions. The report highlights a general trend of yield increases (indicating weaker market sentiment) across many sectors, reflecting factors such as rising interest rates, inflation pressures, and macroeconomic shifts including Brexit impacts on sterling. It's compiled for reference purposes and includes key changes from July 2021 to July 2022.

Market Sectors and Yield Dynamics

Residential and Retail Sectors

• City Prime (Single let, 10 years): Yield stable or slightly lower, market sentiment weak.
• West End Areas: Prime regions exhibit stable yields, while non-core areas show weakening sentiment.
• Major Regional Cities (Single let, 15 years) and Offices (Grade A): Yields declining, indicating a weaker market environment.
• Student Accommodation (London and Regional): Rates remain relatively stable or show minor decreases.
• Retail: Overall sales volumes decreased, with online penetration lagging; major shopping centre yields indicate stable but often negative trends.

Specialist and Distribution Sectors

• Healthcare and Data Centres: Sectors see yield increases, reflecting market pressure.
• Warehouse, Industrial, and Budget Hotel Markets: Most exhibit weaker sentiment, with yield points rising due to economic uncertainties.
• Secondary and Good Modern Estates: Sectors show consistent yield increases; high street retail in towns like Oxford demonstrates weakening trends.

ESG and Economic Drivers

• ESG focus on standards such as the WELL certification affects outcomes positively.
• Key drivers include elevated construction costs, rising inflation rates in the UK, and central bank rate hikes, which contributed to higher yields across regions. Currency weakness has impacts on investment overall.

Key Macro Trends Analysis

• Global Context: EPUCE updates noted ECB potential rate hikes since March 2022 driving up interest rates in key financial markets like the US and UK.
• Inflation Impact: Prices rose 7.4% compared to 9% benchmarks. Economic growth forecasts lowered, exacerbated by political Brexit developments impacting sterling.
• Construction Consequences: High material costs and increased construction index estimates lead to potential pipeline supply constraints, with future office and space deficits highlighting rental opportunity.

Concluding Note

Overall market sentiment is weak in most sectors analyzed, with yields increasing predominantly. This is driven by economic tightening, poor COVID-era comparisons, and shifts in global investments.

For detailed data points and further insights, consult the full Knight Frank Intelligence report.