Data for Q2 confirm that, as with the economic recovery, the property upturn is more advanced in Scandinavia than in western Europe. Investment activity grew strongly, even when excluding a large one-off deal. Prime all-property capital values also rose as rents surpassed their pre-virus levels while yields declined slightly. That said, this improvement was mostly driven by the industrial sector. Looking further ahead, we expect to see some slowdown in industrial occupier demand as economic activity and online shopping behaviour normalise. As such, given our view that structural factors will weigh on the retail and office sectors in the coming years, we expect the pace of all-property capital value growth to slow in H2.
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