Scandi & Swiss: Virus seals dominance of industrials

Investment activity and rents have felt the impact of the virus, with the retail sector bearing the brunt. Indeed, after falling by around 2% this year, we think that Scandinavian retail rents will end 2020 4% lower than in 2019. And with rising vacancy in offices, we think that the falls in rents have further to go in H2, with the likelihood of more remote working slowing the post-2020 recovery. In sharp contrast, the industrial sector has so far had a good crisis. Beyond 2020, with COVID-19 highlighting the need for logistics infrastructure and the greater shift to online shopping, we think that rents will continue to grow at a fast clip. As a result, industrial returns in Scandinavia and Switzerland are set to outperform not only offices and retail but also the euro-zone and CEE over the next five years.