Commercial Auction Annual Review 2018
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The allshop barometer

Overall regional retail yields have softened in the period between July 2018 and December 2018 compared with the period between December 2017 and May 2018.

Competition from buyers for retail investments is strongest in the south of the country with yields being more resilient and hardening in parts while retail yields softened in much of the north of the country.

Retail yields in Scotland have remained stable over the past 6 months with Medium (5-9 years) and Long term (10-15 years) income tranche retail yields remaining at 9.5% and 6.6% respectively.

Wales has seen average retail yields soften to 11.0%.

In the north of the country the North East has performed the best out of the Northern regions with average retail yields hardening to 7.6% from 7.9%. Conversely the North West has seen average retail yields soften to 8.3% from 7.5%. This is likely to be attributed to the quality of the regional stock brought to the market during this period.

Retail yields softened in the West Midlands in all 3 income tranches with average retail yields softening to 8.1% from 6.9%. The East Midlands saw a similar story with the exception of Long income (10-15 years) which hardened by 100 basis points to 4.9%, a notable improvement.

East Anglia has seen average short term (3-5 years) income soften to 8.3% while average medium term (5-9 years) income has hardened to 7.2%

The South West has seen average retail yields harden to 7.0% from 7.9% with medium term (5-9 years) income moving in from 8.8% to 7.3%.

In the South East average retail yields remained stable at 6.2%. Small adjustments have been seen in individual income tranches but overall retail yields in this region were stable during this period.

London saw retail yields harden over all 3 income tranches and average overall retail yields come into 5.4% from 6%.

The yield gap between average retail short income (3-5 years) and average retail long income (10-15 years) has remained stable at 1.9%. However, both short and long income average yields have both softened by 0.7%. Average retail yields in the short income tranche are now 8.5% and average retail yields in the long income tranche are now 6.6%. The maintaining of the yield gap at 1.9% suggests an overall rise in risk across the whole retail sector, which perhaps is understandable in the current climate.