Real Estate Yields in UK and Europe
Hi there,
I was wondering if someone can succinctly explain the different real estate yields used in both the UK and Europe.
My current understanding:
NIY = NOI / all-in NY = NOI / net GIY = Passing / all-in GY = Passing / net ERV Yield in UK = ERV / all-in ERV Yield in Europe = ERV / net
Where:
NIY = Net Initial Yield NY = Net Yield GIY = Gross Initial Yield GY = Gross Yield ERV Yield = Estimated Rental Value Yield
All-in = All-in price (including all purchase costs) Net = Net price (does NOT include purchase costs)
Could someone kindly confirm whether this understanding is correct, and if not, where I have gone wrong?
Many thanks,
Hey ed666, what a lonely thread. I'm here since nobody responded ...so maybe one of these discussions will help:
If we're lucky, maybe these professional users will respond: naturalexponent mkwin mkbelenky
Fingers crossed that one of those helps you.
Hi there,
Thank you so much for your reply.
Perhaps people don't know the answer, which is why they don't reply!
It would have been helpful to know the answer though.
Thank you again.
Hi,
So actually Europe doesn’t have one standard practice. Spain is a notable country where yields are always quoted gross, for example. I can’t see much wrong with what you’ve posted, quite logical but perhaps not the terms used in UK/Europe.
What I have usually seen is Gross Yields and Net Yields, but mostly net yields are discussed along with Net Equivelant Yeild, essentially a reversionary yield. ERV yield isn’t something I’ve seen used very much, largerly due to mainland European valuers not being particularly consistent.
I hope this helps.
Out of interest, what is the desire to know the yield based off of net asset value? It’s not something I’ve seen discussed much. To judge an asset in my view you want to see what the running net yield is, versus what it costs.
Using net asset values in Europe for example could give you the wrong image between certain assets, different tax legislations etc.
Interested to hear the use of it.
Thank you so much for your reply REIT Mafia, it is very helpful.
So you are used to seeing Net Yield (NOI / Net) and Gross Yield (Passing / Net) – is that correct?
When you say Net Equivalent Yield – what is the difference between this and the Net Yield?
When you say Running Net Yield – are you referring to your stabilised Net Yield, i.e. your projected future NOI / net?
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