UK - Average property yields in the UK fell by 15 basis points to 7.03% in August, the lowest level since November 2008, according to Cushman & Wakefield.
The finding has been cited as yet further evidence that investor sentiment in UK commercial real estate is continuing to improve.
Yields fell in nine out of 25 key indicators in August, with yield compression more widespread than in July and all sectors now experiencing yield falls, C&W said.
Moreover, the trend in yields remains downwards, with shop units and London offices under most pressure and with industrial and retail warehousing now pausing for breath after sizeable yield falls since the Spring.
In its latest briefing, the real estate adviser said stronger economic sentiment had helped the market, but the gap between supply and demand had been exacerbated, with a scarcity of prime stock coming available, forcing yields to correct as bidders compete for investment opportunities.
C&W expected demand to continue to grow over the coming months, especially if continental European investors commit new fund allocations targeting the UK.
The firm also warned that occupational trends remain weak and rents continue to fall across most parts of the market, although the central London office market is seeing signs of stronger occupier activity (from a historically low level).
"On the back of more positive economic sentiment, we are seeing the first signs that occupational property markets may soon start to find their floor," said David Hutchings, head of research EMEA at C&W.
"However, it is clear there will be more pain to come in the short term and investors must be sure they have this priced into the assets they are buying - and those they are holding.
"For now, pricing is still attractive but once investors start to push into the secondary markets to find stock - and there are signs that some may soon be ready for this - then risks will grow that investment market pricing will get ahead of occupier market trends."
