As widely expected, Q2 brought a range of disappointing data, from plunging investment volumes to further falls in retail rents. And while property values outside of retail have generally held up so far, fragile occupier demand and rising vacancy suggest that it is just a matter of time before weakness in activity weighs on them too. Beyond the immediate hit from COVID-19, we expect a shift to more remote working will delay the recovery in the office sector, in contrast to our previous view that values would rebound. Meanwhile, we think that the only gradual recovery in consumer spending and growing popularity of ecommerce will continue to act as a headwind for retail. In comparison, we expect the drop industrial values this year to be more than regained in 2021. The upshot is that industrial is set to continue to outperform over the next five years.
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