With the prospect of monetary tightening coming to an end, we expect government bond yields, and therefore property yields, to stabilise over the remainder of the year allowing investment activity to resume.
Polarisation across the market will be driven by ongoing structural changes and the focus on ESG
credentials. We expect sectors and assets which are well aligned to modern requirements will outperform in capital value and rental growth and careful planning will be critical to avoid ‘stranded’ assets.
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Strategy Implications
Over the second half of 2023, interest rates are expected to stabilise, which should provide investors with a degree of price certainty. Whilst transaction activity may be slow to resume, real estate investors may find opportunities at new, attractive prices once buyer and seller aspirations become more closely aligned.
