This matrix provides detailed analysis of yield profiles across the market – ensuring you can make an informed decision about your investment activity.

Download the Q1 2015 matrix.

Yield compression continues

Despite uncertainty around the outcome of the election, the prevailing low interest rate environment and increasingly competitive lending appetite suggests there is more scope for yield compression than was widely thought six months ago. While yields at the prime end of the market were broadly stable in Q1, our latest UKIT report reveals that the All Property transaction yield dropped below 6.0% for the first time in seven years. The majority of sectors saw a hardening of average transaction yields, indicating that prices continued to increase for the wider market.

Investors undeterred by election

Investor appetite appears undeterred by the upcoming General Election. On the heels of a record year in 2014, Q1 volume reached £19.1bn, the second highest quarterly total on record after Q4 2014. The specialist sectors are becoming an increasingly important feature of the investment market, reflected by a record £3.7bn of investment in Q1, or 20% share of volume.

From yield compression to rental growth

Based on the IPD measure, our forecast for All Property returns stands at a healthy 12% in 2015, with capital growth taking the lion’s share of total returns. However, rental growth is playing an increasingly important role in driving performance, reflecting the strength of demand and supply pressures in the occupier markets. Thus, in 2016, our forecast is for on trend All Property returns of circa 8%, with income generation and rental growth underpinning investment performance.