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The latest data suggest that a property repricing is already underway in response to higher interest rates and stretched valuations. We expect a cumulative rise in all-property yields of 35bps-40bps across the Scandinavian and Swiss markets over the next 12-18 months. With most economies in the region in recession by the turn of the year and structural changes weighing on the office and retail sectors, rental growth is unlikely to be strong enough to prevent all-property capital values falling in most markets in 2022 and 2023. That said, with interest rates and bond yields likely near their peaks, the correction is expected to be mild by past standards. Overall, industrial is forecast to perform best over the 2022-26 period, though the sector’s lead will reduce sharply compared to recent years.
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