Global bond yields spiked in Q2, following comments by the Federal Reserve that it might withdraw quantitative easing (QE) more quickly than originally planned. We quantify the impact on relative value of an early QE withdrawal for 20 office markets compared to our base case.
In our base case, we assume an orderly unwinding of QE, in line with market expectations and earlier guidance. The sustainable economic recovery will benefit offices as stronger occupier demand coupled with limited new development will result in robust rental growth. That said, even an orderly QE unwind will trigger bond yields to widen, in turn putting pressure on current low property yields. However, the impact on relative value for offices will be partly mitigated by a lower property risk premium, as risks moderate in this part ofthe cycle.
Source : DTZ (Groupe UGL)