The All Property Average Yield is unchanged for the fourth survey in succession. The benchmark gilt yield fell by 0.3 of a percentage point and is now 0.1% points below the All Property Average Yield. This was last seen in 1994 when the yield gap stimulated new investment demand. Now, of course, the market is further advanced on the recovery phase of the cycle, with greater rental value growth being recorded by the Hillier Parker Rent Index.
The Retail sector yield has probably peaked, with the latest figures indicating marginal falls in some regions. With the exception of London, however, these were not significant enough to move the indices.
The Office sector remained stable over the quarter. Indeed, no overall change has been registered for over two years. The figures mask downward pressures in London. Slight decreases have occurred over the year in several provincial regions. Scotland is alone in registering an annual increase, continuing a trend seen in previous surveys.
Downward movement of yields is most evident in the Industrial sector. The quarterly decrease of 0.1 of a percentage point was only the second since May 1994. Furthermore, the marginal annual decrease was the first for two years. Scotland continues to register increased yields, counter to the general downward trend, with a 0.25% point rise over the twelve months.
Figures are rounded up to one decimal place. Average Yields are compiled assuming rack-rented properties, located in prime positions of towns and no more than five years old (with the exception of high street retail).
AVERAGE YIELDS
Actual Change
Feb May Aug Nov Feb May Aug Nov Feb Nov96- Feb96-
95 95 95 95 96 96 96 96 97 Feb 97 Feb97
Shops 6.2 6.5 6.5 6.6 6.7 6.9 6.9 6.9 6.9 -0.0 0.2
Offices 6.9 6.9 6.9 6.9 6.9 6.9 6.8 6.8 6.8 -0.0 -0.0
Indust-
rials 8.4 8.5 8.5 8.5 8.5 8.4 8.4 8.4 8.4 -0.1 -0.1
All
Property 7.4 7.5 7.5 7.5 7.6 7.7 7.7 7.7 7.7 -0.0 0.1
Gilt
Yields 8.7 8.6 8.4 8.2 7.9 8.3 8.2 7.9 7.4 -0.5 -0.5
Equity
Yield 4.1 4.1 3.9 3.9 3.7 3.7 3.9 3.8 3.5 -0.3 -0.2
AVERAGE YIELDS
Feb May Aug Nov Feb May Aug Nov Feb Nov96- Feb96-
95 95 95 95 96 96 96 96 97 Feb97 Feb97
All Shops 6.2 6.5 6.5 6.6 6.7 6.9 6.9 6.9 6.9 -0.0 0.2
Central
London 5.1 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.1 -0.1 -0.0
Inner Sub
London. 8.7 9.0 9.1 9.1 9.2 9.4 9.4 9.4 9.4 -0.0 0.2
Outer Sub
London. 7.1 7.3 7.4 7.4 7.5 7.7 7.7 7.7 7.6 -0.1 0.1
Suburban
London 7.9 8.2 8.2 8.2 8.4 8.6 8.6 8.6 8.5 -0.1 0.1
London 6.8 7.0 7.0 7.0 7.0 7.1 7.1 7.1 7.1 -0.1 0.0
South
East 5.6 5.9 6.0 6.0 6.1 6.5 6.5 6.5 6.5 -0.0 0.3
South West5.3 5.6 5.6 5.6 5.8 6.0 6.0 6.0 6.0 -0.0 0.3
East
Anglia 5.4 5.7 5.7 5.7 5.9 6.1 6.1 6.1 6.1 0.0 0.2
East
Midlands 5.7 6.1 6.1 6.1 6.3 6.6 6.5 6.5 6.5 -0.0 0.2
West
Midlands 5.2 5.4 5.4 5.4 5.5 5.8 5.8 5.8 5.8 0.0 0.3
Wales 6.5 6.7 6.8 6.8 6.9 7.2 7.2 7.2 7.2 0.0 0.3
North West5.7 5.9 6.0 6.0 6.0 6.3 6.3 6.3 6.3 0.0 0.3
Yorks
& Humbs 5.7 5.9 6.0 6.0 6.2 6.4 6.4 6.4 6.4 0.0 0.2
North 5.8 6.1 6.2 6.2 6.3 6.4 6.4 6.4 6.4 0.0 0.1
Scotland 6.2 6.3 6.4 6.4 6.4 6.5 6.5 6.5 6.5 -0.0 0.0
All
Offices 6.9 6.9 6.9 6.9 6.9 6.9 6.8 6.8 6.8 -0.0 -0.0
West End 5.4 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 -0.0 -0.0
Holborn/
Marylebone7.0 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 0.0 0.0 Central
City 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 0.0 0.0
Fringe
City 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 0.0 0.0
Central
London 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.8 -0.0 -0.0
Suburban
London 6.9 6.9 6.9 6.9 6.8 6.8 6.8 6.8 6.8 -0.0 -0.0
London 6.2 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 -0.0 -0.0
South East6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 0.0 -0.0
South West7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 0.0 0.0
East
Anglia 7.2 7.3 7.3 7.3 7.3 7.3 7.3 7.3 7.3 0.0 0.0
East
Midlands 7.7 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 0.0 0.0
West
Midlands 7.3 7.3 7.3 7.3 7.3 7.1 7.1 7.1 7.1 0.0 -0.1
Wales 8.2 8.3 8.3 8.3 8.3 8.2 8.2 8.2 8.2 0.0 -0.1
North
West 8.0 8.0 8.0 8.0 8.0 7.9 7.9 7.9 7.9 0.0 -0.1
Yorks
& Humbs 7.5 7.5 7.5 7.5 7.5 7.4 7.4 7.4 7.4 0.0 -0.1
North 8.2 8.3 8.3 8.3 8.3 8.2 8.2 8.2 8.2 0.0 -0.1
Scotland 6.6 6.7 6.7 6.8 6.8 6.8 6.9 6.8 6.8 0.0 0.1
All Indust-
rials 8.4 8.5 8.5 8.5 8.5 8.4 8.4 8.4 8.4 -0.1 -0.1
All
Indust-
rial 7.8 7.8 7.8 7.8 7.8 7.7 7.7 7.7 7.6 -0.1 -0.2
London 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 -0.0 -0.1
South
West 8.2 8.2 8.2 8.2 8.2 8.2 8.2 8.2 8.2 0.0 -0.0
East
Anglia 8.2 8.2 8.2 8.2 8.2 8.2 8.2 8.2 8.2 0.0 -0.0
East
Midlands 8.0 8.0 8.0 8.0 8.0 7.9 7.9 7.9 7.8 -0.1 -0.1
West
Midlands 8.2 8.2 8.2 8.2 8.2 8.1 8.1 8.1 8.1 -0.1 -0.1
Wales 8.6 8.6 8.6 8.6 8.6 8.6 8.6 8.6 8.5 -0.1 -0.1
North
West 8.5 8.5 8.5 8.5 8.5 8.4 8.4 8.4 8.3 -0.1 -0.3
Yorks
& Humbs 8.4 8.4 8.4 8.4 8.4 8.3 8.3 8.3 8.2 -0.1 -0.2
North 8.8 8.8 8.8 8.8 8.8 8.8 8.8 8.8 8.8 0.0 0.0
Scotland 8.5 8.6 8.8 8.8 8.9 9.0 9.2 9.2 9.2 -0.0 0.3
For further information, contact: Alan Patterson, Head of Investment Research, Tel: +44 (0) 171 629 7666, Fax: +44 (0) 171 409 3016
