Over the past 30-35 years, supermarket property total returns have averaged more than 11% p.a., better than any of the other main segments. However, this long period of outperformance has now left rental values looking high and yields low. Combined with the subdued outlook for grocery spending, we think these factors will ensure that supermarket property returns are far weaker in the future. Our forecast is that over 2014-18 they will average 5% p.a.
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