Will Zayn Malik re-join One Direction?

I really don’t know the answer to that question. And I don’t care. I will happily leave pondering it to another generation with time on their hands to consider pointless and inconsequential matters.
What concerns me most about Direction  is the likely direction of our investment market.

It has been obvious for some time that a major driver – if indeed not the major driver – of price in the industrial building market has been interest rates. Low interest rates  have been a major factor in enticing many smaller businesses to purchase their own premises. Paying interest has been a cheaper proposition than paying rent.And low interest rates  have played a part in forcing yields down for investors – which in turn pushes prices up. Even a low yield can be substantially more attractive than miniscule interest rates banks are paying.

But could that all be about to change?  I am not speculating about a collapse in prices – or even necessarily a decrease. But, should interest rates start to  increase, that could preface in increase in yields, and therefore lesser prices. We believe that real interest rates, the ones businesses actually pay, have already started to increase. Realistically we don’t believe that prices are likely to reduce in a hurry. At least not dramatically. But any sign of interest rate increases would, we think, halt the upward trend in price that has been experienced over the last few years.
Any interest rate increase narrows the gap between paying interest and paying rent. It also changes the leverage equation for investors. But, most importantly, it reduces the incentive for investors to invest in property rather than other asset classes.

Add in that the major banks are seemingly losing their lending eagerness, and the borrowing equation becomes somewhat more difficult.
For central banks everywhere, lowering interest rates towards and beyond zero has not been the radical stimulus expected .Momentum is also swinging against a continuation of quantitative easing in most markets.The one direction which should really be concerning us now is the direction real interest rates are taking. Not the OCR or published rate, but  the rate businesses actually borrow at. Because a change in direction of those rates is likely to signal a direction change, perhaps 12  to 18 months away, in both yield and price in the sensitive owner/occupier and small investor market.