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Short-term prospects improve, but clouds gathering

In the last few months, economic growth prospects have improved across Europe, boding well for rental growth and pointing to sharper falls in property yields in the next 12-18 months. But the improved economic growth outlook also means that monetary policy is likely to be tightened sooner than we previously expected, leading to earlier and faster bond yield rises. This means that property yields in Scandinavia, Switzerland and the Czech Republic could face upward pressure from early 2019. Much of Emerging Europe will begin to face yield rises a year later.

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