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Pandemic hit mild by past standards, but recovery slow

Euro-zone prime property will likely get off more mildly than many expected at the start of the pandemic. We forecast another small fall in all-property capital values this year, with yields holding steady and rental values extending their declines. That said, the cumulative drop in retail values will be far more severe, with the correction materially worse than over 2008-09. And the recovery will be slow, even once economic activity returns to normal. This reflects a faster transition to online shopping and an accelerated adoption of remote working, which will weigh on the retail and office sectors. As a result, industrial will continue to be the standout performer over a five-year horizon.

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