Have capital values peaked or plateaued?

The latest data on both the economy and property markets have done little to change our outlook. One exception is the industrial sector where, on the back of healthy occupier demand, we have upgraded our forecasts. With the economy growing at a modest (if unspectacular) pace, an uptick in rental value, and therefore, capital value growth does not seem to be on the cards. Equally, however, while we do expect the MPC to begin to tighten monetary policy gradually next year, property valuations have enough room to accommodate higher risk-free rates. In all, the stage looks set for the income component of returns to do most of the heavy lifting.