Total returns set to be sharply lower

With the ECB likely to loosen monetary policy before too long, government bond yields look set to stay at very low levels for some time. As a result, we think that yield compression has a little further to run this year and next. That is, with the exception of the retail sector, where we expect yields to rise in an increasing number of markets on account of concerns about the ability of retail assets to generate rental growth, or even to just maintain existing rental levels.