End of the correction in sight, but outlook remains gloomy

The price correction showed signs of stabilisation in early 2024, but we think further, albeit much smaller, value falls are to come as yields edge a bit higher. Values should bottom by year-end, but the recovery thereafter will be muted by past standards. Going forward, rent growth is forecast to soften in each sector as a weak economic backdrop drags on demand and structural headwinds further limit rental gains for offices and retail. Narrow spreads also suggest little scope for yield compression to boost value growth. Offices and retail are expected to be the worst performing sectors with returns of 5.5% p.a. in the euro-zone over 2024-28. A brighter rent outlook means industrial leads the way with annual returns of 8% p.a.