Further yield rises to weigh on capital values

Yields rose again in April and there is more of the same to come over the summer months. While rental values fell slightly, the rise in yields meant that capital values declined by 1.8% m/m in April. This saw annual returns turn negative for the first time since November 2009. As investor caution is likely to persist and rental values weaken, capital values will fall by over 10% this year, keeping returns in negative territory.