Average all-property prime yields hit 4.9% in July, the highest
level since November 2016, according to research conducted by Savills.
Yields were largely stable month-on-month but rose a quarter
point across retail warehousing and leisure assets since June.
City offices marked an exception to the upwards trend, with
prime yields hardening from 4.25% in June to 4% in July.
Savills said it believed opportunistic investors are continuing
to observe the UK market, particularly retail assets, keeping transactional
volumes low while they wait for the right prices.
High street shops bucked the overall downward trend in
investment volumes, with a 9% increase in activity in the first half of 2016
compared to the same period the year before.
Mat Oakley, head of UK and European commercial research at
Savills, said: “The depth of interest and the prices we’re seeing being
achieved on prime London assets indicates that there is a still a significant
depth of demand for high quality commercial property.
“With these assets also continuing to deliver positive capital
value growth, any further weakening of sterling in the second half of 2019 is
likely to see additional demand unleashed and rising volumes.
“There are also investors circling ready to buy distressed
retail assets although the prices they’re willing to pay will have to be
commensurate to the risks involved.”