Business Immo, the real estate website

Why rate hikes shouldn’t yield trouble for UK real estate

Published on

A research produced by

Why rate hikes shouldn’t yield trouble for UK real estate

UK interest rates are expected to rise gradually over the next three years, in tandem with the economic recovery.

Prime property shows a relatively weak correlation with gilt yields and base rates, whilst average property displays a moderate positive relationship.

Broad fundamentals are supportive for real estate – an improving economy, expected rental growth, limited supply and a historically high yield spread versus gilts.

Potentially least sensitive to rate hikes: prime office and retail.

Potentially most sensitive to rate hikes: secondary retail.

Biggest risks for UK real estate: sharp and unexpected interest rate hikes; weaker than expected occupier market and rental growth.

Source : M&G Real Estate

This research is available only to BI or BIE subscribers

Please log in, or contact us to find out how to subscribe

Keywords : M&G Real Estate