Consistent with the sharp fall in economic activity, occupier demand weakened further in Q2. And with bargaining power shifting to the tenant, rental falls were also evident in many markets, with the sharpest declines recorded in the retail sector. (See Chart 1.) That said, we think that greater falls are yet to come, with occupiers still adjusting to lower levels of output and the uncertain outlook. With office and retail yields also ticking up, we expect substantial declines in property values across most CEE markets this year.
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