Property Yields Hardening, Says CBHP

LONDON-Despite the lacklustre performance of the occupational markets, investor demand is again driving down property yields, according to CB Hillier Parker. The All Property Average Yield fell marginally to stand at 7.1% in Q2 2003, the first reduction since the same quarter last year. At a sector level there were small reductions in high street shop and industrial yields to 6.7% and 7.8% respectively.

Greg Nicholson, Head of Investment at CB Hillier Parker, said: “At the moment property investors are proving to be highly resilient. Contrary to some expectations property yields fell marginally in the second quarter, despite relatively bleak news from the occupier markets. However, without debt-finance purchasers, investors would be pretty thin on the ground.”

This mean investor demand is very sensitive to changes in interest rates. Although the Bank of England kept its base rate static this week, the trend is still downward. “With the UK and global economy continuing to disappoint, the next move on interest rates could well be down, encouraging investors to stay in property,” said Nicholson.