2024-03-07-莱坊-Investment_Yield_Guide_March_2024_4页_400kb

Prime Yield Guide – March 2024 Summary

Core Content Overview

The Prime Yield Guide – March 2024 provides an indicative overview of property yields across various sectors in the UK, including High Street Retail, Offices, Warehouse & Industrial, and Specialist Sectors. The data is based on rack rented properties and excludes bond type transactions. It highlights yield trends, changes, and market sentiment from March 2023 to March 2024.

Main Property Sectors and Yields

1. High Street Retail (institutional lot sizes)

• Bond Street: 2.75% - 3.00% (Stable)
• Oxford Street: 4.25% - 4.50% (Stable)
• Prime Towns (Oxford, Cambridge, Winchester): 6.75% (Stable)
• Regional Cities (Manchester, Birmingham): 7.00% (Stable)
• Good Secondary (Truro, Leamington Spa, Colchester etc): 9.00% - 9.25% (Stable)

Key Insight: Yields for High Street Retail have remained relatively stable, with some areas like Good Secondary showing an upward trend.

2. Shopping Centres (sustainable income)

• Regional Scheme: 8.00% + (Stable)
• Sub-Regional Scheme: 9.00% + (Stable)
• Local Scheme (successful): 9.75% + (Stable)
• Neighbourhood Scheme (assumes <25% of income from supermarket): 9.50% - 9.75% (Stable)

Key Insight: Shopping Centre yields have remained stable, with consistent performance across all schemes.

3. Out of Town Retail

• Open A1 Parks: 6.00% (Stable)
• Good Secondary Open A1 Parks: 7.50% (Stable)
• Bulky Goods Parks: 6.00% (Stable)
• Good Secondary Bulky Goods Parks: 7.50% (Stable)
• Solus Open A1 (15 year income): 5.75% - 6.00% (Stable)
• Solus Bulky (15 year income): 5.75% - 6.00% (Stable)

Key Insight: Out of Town Retail yields have remained stable, with some areas showing a slight increase in yield over the year.

4. Offices

• City Prime (10 years): 4.75% (Stable)
• West End: Prime Core (Mayfair & St James's): 3.75% (Stable)
• West End: Non-core (Soho & Fitzrovia): 4.50% (Stable)
• Major Regional Cities (10 years): 5.75% (Stable)
• Major Regional Cities (5 years): 6.50% - 7.00% (Stable)
• Secondary Regional Cities: 9.00% - 9.25% (Negative)
• South East Towns (10 years): 6.00% - 6.50% (Stable)
• South East Towns (5 years): 7.50% (Stable)
• Secondary South East Towns: 9.25% - 9.50% (Negative)
• South East Business Parks (10 years): 7.00% (Negative)
• South East Business Parks (5 years): 8.50% + (Negative)
• Secondary South East Business Parks: 9.75% + (Negative)
• Life Sciences (Oxford, Cambridge): 4.25% - 4.50% (Negative)

Key Insight: Office yields have generally remained stable, though Secondary Regional and South East areas show negative sentiment.

5. Warehouse & Industrial

• Prime Distribution / Warehousing (20 years [NIY], higher OMV/index): 4.75% (Stable)
• Prime Distribution / Warehousing (15 years, OMRRs): 5.25% (Stable)
• Secondary Distribution (10 years, OMRRs): 5.50% - 5.75% (Stable)
• South East Estates (excluding London & Heathrow): 5.00% - 5.25% (Stable)
• Good Modern Rest of UK Estates: 5.25% - 5.50% (Stable)
• Good Secondary Estates: 6.50% - 7.00% (Stable)

Key Insight: Warehouse and Industrial yields have remained stable, with some areas showing a slight increase.

Specialist Sectors

• Car Showrooms (20 years with indexed uplifts & dealer covenant): 5.75% (Stable)
• Budget Hotels London (20 years, 5 yearly indexed reviews): 4.50% (Stable)
• Budget Hotels Regional (20 years, 5 yearly indexed reviews): 5.00% - 5.25% (Negative)
• Student Accommodation Prime London (Direct Let): 3.75% - 4.00% (Stable)
• Student Accommodation Prime Regional (Direct Let): 5.00% - 5.25% (Stable)
• Student Accommodation Prime London (25 years, Annual indexation): 4.00% (Stable)
• Student Accommodation Prime Regional (25 years, Annual indexation): 4.25% (Stable)
• Healthcare (Elderly Care, NFP, 30 years, Annual indexed reviews): 4.00% - 4.25% (Negative)
• Data Centres (Operational): 4.50% (Stable)
• Data Centres (Leased, 15 years, Annual indexation): 4.75% + (Stable)
• Income Strips (50 years, Annual RPI / CPIH+1% RRs, Annuity Grade): 4.00% (Stable)

Key Insight: Specialist sectors show a mix of stable and negative trends, with Student Accommodation and Data Centres remaining stable, while some healthcare and regional hotel sectors show negative sentiment.

Leading Indicators

• A late 2024 general election is expected, potentially allowing a final pre-election Autumn Statement.
• Interest rate expectations have fluctuated since November 2023, with current market pricing suggesting the Bank of England base rate will average 4.8% in 2024, down from the previously expected 5.0%.
• UK company incorporations saw a +22% increase in the first seven weeks of 2024 compared to 2023, marking the strongest start since 2019.

Key Insight: The market anticipates a final Autumn Statement in late 2024, with more optimism for interest rate cuts than in previous months.

Debt Market (March 2024)

Key Insight: The debt market shows some fluctuation, with the Bank of England base rate expected to remain around 4.8% for 2024, and the 5-year SONIA Swap Rate rising slightly.

Key Research Highlights

• Future Gazing - 2024 offers insights into the industrial and logistics market, suggesting a unique perspective on future trends.
• ESG and M&S Marble Arch case study provide lessons on sustainability and performance in retail properties.

Key Insight: The guide emphasizes the importance of ESG considerations and includes a case study on the M&S Marble Arch property to illustrate market dynamics.

Additional Information

• Knight Frank has expertise in Waste and Energy, Infrastructure, Garden Centres, Film Studios, Serviced Offices, Data Centres, Life Sciences, Income Strips, Ground Rents, Trading assets, Expert Witness, and IPOs.
• The report is for general information only and not to be relied upon for decision-making. It is subject to change and is not tailored to specific properties or projects.

Key Insight: The report is a general market overview and does not provide specific advice on individual properties or projects. It is intended for informational purposes only.