London Property Market Snapshot: July 2016
Lower interest rates, higher inflation, a devalued pound and an almost record spread between government bonds and commercial property yields suggest that commercial property located both in and out of London, and let on long leases to strong tenants, will perform well in the short to medium term. After all, what other investment gives investors a yield anywhere near that achieved in commercial property?
This month, we have seen Whitbread’s flagship ‘Hub by Premier Inn ‘ hotel, let for 25 years and located in Kings Cross, sell for sub 4%, confirming this view.
In complete contrast, forecasters are predicting capital value falls for London offices by as much as 10% between now and 2020. Whether such falls occur, and by how much, will obviously depend on how well occupational markets perform and how much supply developers provide.