Fundamentals will conquer short-term fears

We have cut our forecasts for UK Commercial Property since our previous Analyst to reflect the heightened uncertainty resulting from the vote to leave the EU. In addition to penciling in a modest rise in yields, we have also trimmed our rental forecasts, consistent with the likely softening in the pace of GDP growth and job creation over the next few quarters. As a result, we now expect all-property capital values to fall by around 3% during the second half of the year. But we do not subscribe to the view that the EU referendum result will act as the trigger for a prolonged property market correction.