Rising interest rates hit property prices

Rising interest rates and bond yields are threatening the recovery of the global commercial real estate market, as increasing costs have led investors to renegotiate prices and lower asset valuations amid declining activity and shrinking deal volumes. The surge in treasury yields to levels not seen in years, with the 10-year U.S. bond yield surpassing 5%, has put significant pressure on property valuations and reduced their attractiveness, as investors try to delay sales or negotiate discounts. The impact of higher interest rates is expected to continue slowing asset sales and market activity, with some investors preferring to hold onto their assets rather than sell at lower prices. Meanwhile, the UK office construction sector remains weak due to economic uncertainty.

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