Commercial property yield warning from Knight Frank

Within the M25 area in particular, investors must take care in selecting their investments because the downward pressure means the margin between yields and debt servicing is being squeezed. Peter MacColl, head of investment at Knight Frank, adds falling yield rates will at some point meet and fall below market swap rates, which are rising. “There is a convergence of five year swaps, presently at 5.08% and rising, and prime M25 office yields. While investors have been mesmerised by the highly profitable opportunities for servicing debt, the trading margins have now been squeezed to vi...