Rental value growth holding up well

All-property rental value growth has been hovering at just under 2% y/y for the past seven months and shows few signs of slowing. But a sectoral breakdown shows that this stability is largely dependent on the strengthening industrial and Rest of the UK office sectors. However, the downward drift in yields which has characterised the market in recent quarters appears to be running out of steam. Unless rental value growth now accelerates, that suggests that a period of unchanged yields will drag down the rate of capital value growth as the year progresses.