Record investment highlights market momentum

While economic indicators point to slower growth this year, investors have so far been unperturbed, piling into the market in Q4 and driving record quarterly and annual investment totals. That was led by record activity in industrial and apartments, which pushed yields lower and capital values higher in those sectors. Industrial occupier indicators point to continued rapid rental growth this year, but for apartments there are already signs of slowing growth. Elsewhere, the improvement in office and retail demand in Q3 looks like it reflected the release of pent-up demand rather than the start of a protracted recovery. This suggests we are right to expect only a slow recovery in rental values in those sectors.