The sharp reduction in economic activity over the first half of the year and prolonged uncertainty have negatively impacted investment activity and occupier demand. We expect this will flow through to rental falls and higher yields this year, particularly in the retail sector. However, the recovery in activity as lockdowns have been loosened has been faster than we expected, especially in Scandinavia. In turn, we expect that rents will recover more quickly than in other parts of Europe. Combined with highly accommodative monetary policy, which is expected to keep bond yields low and support property valuations, this will allow capital values to rebound next year. A second wave remains a key risk to our forecasts and would likely curtail the recovery in the prime property market.
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