MIPIM 2016: Small lots sizes, Scotland, high street retail outside of London and urban logistics will offer the best returns this year, according to the latest analysis from Savills.
The analysis of deals by lot size found that assets in the £5m-£15m bracket delivered the highest yields across the retail, offices and industrial sectors with a spread to other lot sizes of between 50 and 200bps. The largest yield gap is for offices, which currently offer 7.37% for assets of £5m-£15m, compared with 5.08% for assets of more than £100m.
In Scotland, assets across all sectors are offering yields around 70-150bps higher than comparable English cities. For prime Scottish offices, yields average 5.32% against 4.75% in England.
“While slowing capital growth in the commercial property market will ultimately lead to lower total returns, there are still plenty of opportunities out there for investors willing to go higher up the risk curve,” said head of commercial research Matt Oakley. “Over the year ahead there will be an increasing focus on areas where capital values have not corrected as well as asset management, development and rental growth opportunities.”
He added: “Investors may also create portfolios of smaller assets to capitalise on the high yields available instead of targeting larger, single assets.”
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