Update of Brexit effect on yields

Post-Brexit, yields across all property sectors saw an immediate increase, however the long-term effect of the vote was unknown. Three months later and market data shows that the average yield across all property sectors has increased to 4.86%. This being said, not all is negative: As the dust settles, market evidence is indicating that properties with a long income certain are maintaining yield at a pre-Brexit level. Many valuation firms are even going so far as to remove the statements of uncertainty added to their valuations after the EU referendum decision.

Prime yields for offices in the West End have increased from 3.0% to 3.50% from September 2015 to September 2016. In the City, prime yields for offices have moved from 4.0% to 4.25% for the same period.

Eugene O’Sullivan, a Chartered Surveyor and Director at Morgan Pryce says: “Fear of the unknown has caused occupiers to require more flexibility in their lease terms. Market conditions in 2015 showed a decline in the break clauses of leases as it was predominantly a landlord’s market. However, we are seeing break clauses on the rise again post-Brexit, as occupiers are deeming it necessary in this uncertain time.”

The continued effect that Brexit will have on yields is still to be seen, but at this stage there is little evidence to suggest it will cause the market downturn that was predicted by so many.

This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants