UK propcos shrugged off the decision by the US Federal Reserve to raise interest rates for the first time in nearly a decade, making gains in early trading following the announcement.
The 25 basis point rise in rates, the first change since December 2008, pushed US Treasury yields to 1% for the first time in three years, narrowing the spread between prime property and bonds.
But Federal Reserve chair Janet Yellen’s statement that further increases would be gradual helped to limit market fluctuations.
CBRE head of EMEA and UK research Neil Blake expected the impact on property to be “muted” given that the decision had been taken because the Fed felt a sustainable recovery was now in place, which would drive rental growth.
Walter Boettcher, director at Colliers International, said: “What pressure it might bring on [investment yields] in the UK will be offset by the relative strengthening of the US dollar against sterling.”
