With the All Property Yield falling by 0.1 of a percentage point over the quarter, it appears that the weight of investors' money is finally causing prices to rise. Despite the uncertainty surrounding ACT reform, the equities market continued to rise in the pre-election period and, with the support of significant pressures on gilts, their yields remained virtually unchanged over the quarter.
Downward yield movement is not yet widely manifest in the Office sector. Despite rental value growth in the West End and City, yields are unchanged, suggesting that such growth has already been priced in or is still to come. The South East saw a quarterly decrease of 0.1% point, generated by the investors' demand for the better-specified, more-productive space which is under-supplied in many occupational markets. However, investors' caution is most clearly illustrated in the other regions, where yields are unchanged. Scotland is alone in registering an upward movement.
The 0.2% point fall in Retail yields is lead by the prime end of the market; downward pressure on yields of Retail income stock is limited. Scotland is showing only a slight movement over the quarter, as yield reductions were confined to Edinburgh and Glasgow. Retail yields again stand below Office yields, by 0.1% point, restoring the relative position to that seen over the last twenty years.
Industrial yields have fallen across the country, despite the current relatively poor rental value growth. Scotland has been lagging the national cycle, but the latest quarterly figures show that it may be passing its yield peak.
Note: Yields are as at May 1st.
There has been a reappraisal of historic data due to a reformulation of weightings. The areas affected are Retail: South West (Feb 1996), East Midlands (Aug to Nov 95 and Aug to Nov 96), West Midlands (May 96). Offices: Central London (May 95 to Nov 96), North West (Feb 91 to Feb 97). Industrial: North West (May to Nov 96).
Average Yields May Aug Nov Feb May Aug Nov Feb May
95 95 95 96 96 96 96 97 97
Shops 6.5 6.5 6.6 6.7 6.9 6.9 6.9 6.9 6.7
Offices 6.9 6.9 6.9 6.9 6.9 6.8 6.8 6.8 6.8
Industrial 8.5 8.5 8.5 8.5 8.4 8.4 8.4 8.4 8.1
All Property 7.5 7.5 7.5 7.6 7.7 7.7 7.7 7.7 7.5
Gilt Yield 8.6 8.4 8.2 7.9 8.3 8.2 7.9 7.4 7.5
Equity Yield 4.1 3.9 3.9 3.7 3.7 3.9 3.8 3.5 3.6
Quarterly Change Actual Change
Feb 97-May 97 May 96 - May 97
Shops -0.2 -0.2
Offices 0.0 0.0
Industrial -0.3 -0.3
All Property -0.2 -0.2
Gilt Yield 0.1 -0.8
Equity Yield 0.1 -0.1
AVERAGE YIELDS (figures are rounded to 1 decimal place)
May Aug Nov Feb May Aug Nov Feb May
1995 1995 1996 1996 1996 1996 1996 1997 1997
All Shops 6.5 6.5 6.6 6.7 6.9 6.9 6.9 6.9 6.7
Central London 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.1 5.0
Inner Sub London.9.0 9.1 9.1 9.2 9.4 9.4 9.4 9.4 9.1
Outer Sub London.7.3 7.4 7.4 7.5 7.7 7.7 7.7 7.6 7.4
Suburban London 8.2 8.2 8.2 8.4 8.6 8.6 8.6 8.5 8.3
London 7.0 7.0 7.0 7.0 7.1 7.1 7.1 7.1 6.9
South East. 5.9 6.0 6.0 6.1 6.5 6.5 6.5 6.5 6.2
South West. 5.6 5.6 5.6 5.7 6.0 6.0 6.0 6.0 5.8
East Anglia. 5.7 5.7 5.7 5.9 6.1 6.1 6.1 6.1 5.9
East Midlands. 6.1 6.2 6.2 6.3 6.6 6.6 6.6 6.5 6.3
West Midlands. 5.4 5.4 5.4 5.5 5.7 5.8 5.8 5.8 5.8
Wales. 6.7 6.8 6.8 6.9 7.2 7.2 7.2 7.2 7.0
North West. 5.9 6.0 6.0 6.0 6.3 6.3 6.3 6.3 6.1
Yorks & Humbs 5.9 6.0 6.0 6.2 6.4 6.4 6.4 6.4 6.1
North. 6.1 6.2 6.2 6.3 6.4 6.4 6.4 6.4 6.2
Scotland. 6.3 6.4 6.4 6.5 6.5 6.5 6.5 6.5 6.4
Actual Change
Feb 97 - May 97 May 96 - May 97
All Shops -0.2 -0.2
Central London -0.2 -0.2
Inner Sub London-0.3 -0.3
Outer Sub London-0.2 -0.3
Suburban London -0.3 -0.3
London -0.2 -0.3
South East. -0.2 -0.3
South West. -0.2 -0.1
East Anglia. -0.2 -0.2
East Midlands. -0.2 -0.3
West Midlands. -0.2 -0.2
Wales. -0.3 -0.3
North West. -0.2 -0.2
Yorks & Humbs -0.2 -0.2
North. -0.2 -0.2
Scotland. 0.0 0.0
All Offices 6.9 6.9 6.9 6.9 6.9 6.8 6.8 6.8 6.8
West End 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3
Holborn/
Marylebone. 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8
Central City 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3
Fringe City 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0
Central London 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8
Suburban London 6.9 6.9 6.9 6.8 6.8 6.8 6.8 6.8 6.8
London 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1
South East. 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.7
South West. 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5
East Anglia. 7.3 7.3 7.3 7.3 7.3 7.3 7.3 7.3 7.3
East Midlands. 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8
West Midlands. 7.3 7.3 7.3 7.3 7.1 7.1 7.1 7.1 7.1
Wales. 8.3 8.3 8.3 8.3 8.2 8.2 8.2 8.2 8.2
North West. 8.1 8.1 8.1 8.1 8.0 8.0 8.0 8.0 8.0
Yorks & Humbs 7.5 7.5 7.5 7.5 7.4 7.4 7.4 7.4 7.4
North. 8.3 8.3 8.3 8.3 8.2 8.2 8.2 8.2 8.2
Scotland. 6.7 6.7 6.8 6.8 6.8 6.9 6.8 6.8 6.9
Actual Change
Feb 97 - May 97 May 96 - May 97
All Offices 0.0 0.0
West End 0.0 0.0
Holborn/
Marylebone. 0.0 0.0
Central City 0.0 0.0
Fringe City 0.0 0.0
Central London 0.0 0.0
Suburban London 0.0 0.0
London 0.0 -0.0
South East. -0.1 -0.1
South West. 0.0 0.0
East Anglia. 0.0 0.0
East Midlands. 0.0 0.0
West Midlands. 0.0 0.0
Wales. 0.0 0.0
North West. 0.0 0.0
Yorks & Humbs 0.0 0.0
North. 0.0 0.0
Scotland. 0.0 0.1
All Industrials 8.5 8.5 8.5 8.4 8.4 8.4 8.4 8.4 8.1
London 7.8 7.8 7.8 7.8 7.7 7.7 7.7 7.6 7.4
South East. 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.2
South West. 8.2 8.2 8.2 8.2 8.2 8.2 8.2 8.2 7.9
East Anglia. 8.2 8.2 8.2 8.2 8.2 8.2 8.2 8.2 7.9
East Midlands. 8.0 8.0 8.0 8.0 7.9 7.9 7.9 7.8 7.6
West Midlands. 8.2 8.2 8.2 8.2 8.1 8.1 8.1 8.1 7.8
Wales. 8.6 8.6 8.6 8.6 8.6 8.6 8.6 8.5 8.3
North West. 8.5 8.5 8.5 8.5 8.3 8.3 8.3 8.3 8.0
Yorks & Humbs 8.4 8.4 8.4 8.4 8.3 8.3 8.3 8.2 8.0
North. 8.8 8.8 8.8 8.8 8.8 8.8 8.8 8.8 8.6
Scotland. 8.6 8.8 8.8 8.9 9.0 9.2 9.2 9.2 9.1
Actual Change
Feb 97 - May 97 May 96 - May 97
All Industrials -0.3 -0.3
London -0.2 -0.3
South East. -0.2 -0.2
South West. -0.3 -0.3
East Anglia. -0.3 -0.3
East Midlands. -0.3 -0.3
West Midlands. -0.3 -0.3
Wales. -0.2 -0.3
North West. -0.3 -0.3
Yorks & Humbs -0.2 -0.3
North. -0.3 -0.3
Scotland. -0.1 0.1
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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