Office yields fall to record lows in major CBD markets
Global prime office yields have fallen to record lows and are unlikely to rise in the near future, even if interest rates rise across the globe.
Savills has said that many core office markets are now yielding below 3 percent, while a number of other prominent cities such as Amsterdam and Paris could also see yields drop under the 3 percent mark by 2020. CBD prime office market yields are now sub-3 percent in Hong Kong (2.43 percent), Frankfurt (2.9 percent), Tokyo (2.9 percent) and Berlin (2.9 percent). Others have seen some of the largest compression in yields in the past three years and are now in negative territory such as Melbourne (–1.74 percent), Beijing (–1.32 percent) and Berlin (–1.2 percent).
The latest edition of Savills’ Impacts report has also concluded that the link between office yields and borrowing has become more tenuous as investors’ profiles have changed and fewer investments are reliant on finance from bank borrowing. A rise in i