The Relationship Between Property Yield and Other Market Yields

Property investment has Exceeded geographical boundaries thanks to Investment globalization, enabling individuals to invest globally.

As an example you could be living anywhere around the world and invest in Real estate in the United Arab Emirates (UAE) Thanks to its government it has become the go-to for property investors all around the world.

However, such investments are linked to broader market yields, including those of bonds and equities.

Understanding the interplay between property yield and other market yields is crucial for valuation professionals.

The dynamics of bond yields, encompassing flat, straight, and running yields, influence the assessment of present income relative to the bond's current value. Total return, measured through the Internal Rate of Return, provides insight into the comprehensive performance of bonds held until redemption. Nominal yield, on the other hand, captures the face value or stated return on bonds and shares.

Conclusion:

In conclusion, the relationship between property yield and other market yields, particularly those of bonds and equities, is very important for valuation professionals.

Yield Definitions for Bonds & Equities :

• For Bonds:

Flat, Straight, Running Yields: Represent the present income as a percentage of the current bond value.

Total Return (Gross Redemption Yield): Measured by the Internal Rate of Return (IRR) for bonds held until redemption.

Nominal Yield: Refers to the face value or the stated return on the bond or shares.

• For Equities:

Earnings Yield: Derived from the net profit after tax divided by the share price.

Dividend Yield: Similar to earnings yield, calculated as the dividend per share divided by the share price.

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