Yield compression has largely come to an end and the easy days are over. Share prices have fallen to take account of lower expected future returns and high levels of market uncertainty, primarily for London-exposed stocks which have de-rated rapidly.
Key concerns include: Brexit, the Business Rate Review, prime London resi sales, the Global economic slowdown and whether Sovereign wealth funds will withdraw from London.
But importantly, the underlying commercial real estate return model is still holding with yields well in excess of debt costs, low gearing levels and companies continue to report decent results and outlooks.
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