For investors concerned with income rather than total returns, there remains an attractive spread over bond yields. Intense demand for yield from income seeking investors has been holding up the whole market. However, UK property already looks a little less favourably priced on a relative basis than it did at the end of 2017. Despite a marginally more positive economic backdrop, UK direct real estate continues to look overpriced for total return investors. The share of the investment market that looks fair value remains very low, having shrunk noticeably over the past 2-3 years. Pricing in most sectors tightened over 2017, whereas the outlook for occupier markets remains relatively weak. It remains appropriate to continue positioning portfolios defensively, and reduce the risks posed by income risk, and cyclical assets and sectors. The excess returns on offer from moving up the risk curve are increasingly thin, although the likelihood of a severe correction still appears low, with yield driven investor demand for real estate set to remain robust in what remains a low interest rate environment.