Market Comment October 2021

One of the most interesting aspects of this most recent lockdown is how much business continued to be transacted. Our observation was that businesspeople realised life had to go on, and therefore found ways to continue to buy and sell property.

The chatter pre-lockdown was speculation that an increased OCR would result in yields mirroring the OCR. Of course the OCR increase didn’t occur (for the present anyway) and yields continued their diminishing course. From sub 4% yields being relatively normal, we are now being “re-educated” that marginally over 3% is the new normal. Crazy as that might seem, it is still better than the interest rates banks are offering. And with more money looking for a home than assets available to purchase, as long as buyers are prepared to pay close to 3%, that will be the new normal.

One of the interesting side effects to come out of the pandemic supply chain issues is that already many businesses we are talking to are contemplating the need to hold more stock. And even reverting to on-shore rather than offshore manufacturing. If either or both trends take hold then that means more demand for industrial space, which means more pressure on existing rents.