Southern Europe leads valuation deterioration

The broad-based jump in equity dividend yields following the virus-driven collapse in equity prices meant that property valuations deteriorated in Q1. This impact was exacerbated in southern Europe, as well as Russia and Turkey, where the March spike in government bond yields has been slower to reverse. Equity dividend yields have since fallen sharply, which should support Q2 valuations. That said, given economic uncertainty and poor rental prospects, property yields are also expected to rise.