Rising alternative asset yields stretch property valuations

There was little change to property valuations in Q4, with two major exceptions. Those were the industrial sector, which saw another decline in its valuation score, and a handful of Southern apartment markets, which dropped into the overvalued range. Both of those shifts seem reasonable though, given the pandemic-driven structural shifts in the US economy and in demographic trends. But the bigger concern is that sharp rises in alternative asset yields in Q1 will cause property valuations to look stretched, pushing all-property valuations well into overvalued territory.