In commercial property, yield links rent to value. Investors compare yields to judge price and risk.
Net initial yield
The current rent divided by the purchase price plus purchase costs. It is the yield most often quoted in investment marketing.
Net initial yield = annual rent ÷ (price + purchase costs) × 100
Reversionary yield
The expected market rent divided by the price. If the market rent is higher than the current rent, the reversionary yield is higher than the initial yield and income may rise at the next review or letting.
Equivalent yield
A weighted measure that combines current and future rent over time. Valuers use it to compare buildings with different lease structures.
Why yields move
When interest rates rise, investors usually want higher yields from property, so values fall for the same rent. Lower-risk buildings with strong tenants and long leases trade at lower yields than secondary buildings with short leases.
Read how UK property is valued and gross vs net yield.
This guide is general information, not financial, tax or legal advice. If you are unsure whether an investment is right for you, speak to a regulated financial adviser.