A subdued economic outlook and continued contraction in retail are expected to weigh on all-property rents and returns this year. In the near-term, rising property yields will be the result of the ongoing correction in the retail sector this year, while a 25bps rise in UK interest rates in 2021 brings a modest increase in other sectors. Over the next five years, we think all-property rental value growth will improve slowly, but steadily, as economic growth recovers and vacancy remains low. As a result, all-property capital value growth will also see consistent improvement. Overall, returns will average 5.7% a year, which remains relatively soft compared with the 8.1% a year average over the last five years.
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