Commercial property valuations began to stabilise in Q3, as a large rise in property yields helped offset a further rise in alternative asset yields. And with the reversal of the “mini-Budget” meaning 10-year gilt yields have now likely peaked, a further rise in property yields will help valuations improve over the next year. Industrial was the only sector to see an improvement in valuations in Q3, but it remains the most overvalued sector by some distance and is still therefore the most vulnerable to a correction.
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