Briefing: Spread’s the word

Finding value is an increasingly difficult task as capital, desperate for high-yielding returns, flows into real estate. Much of what is driving this effect is the spread between the yield property provides and the generally low returns that government bonds in each country offer. The larger the spread, arguably the more value there is to be found. Savills reveals where to find the gap.

“World city yields would seem to be on the low side, having moved in, on average, 26 basis points over the past 12 months… Looking forward, it would appear that substantial rental growth will be needed in most of the world city office markets, especially if the expectation is that gilt rates will move out as base rates rise.”

Savills’ World Cities report