With property yields close to a peak and rental growth surprising on the upside, total returns will turn positive in 2024. But we doubt the fall in risk-free interest rates we expect will trigger any yield falls over the next five years and the recovery will therefore be modest by past standards. We expect all-property total returns to average just 7.1% p.a. over 2024-28. The lack of any decline in yields means capital value growth will be limited to impacts from rental growth, which will be best in the industrial sector at 4.0% p.a. over 2024-28. Retail rental growth will be more modest at 1.9% p.a., but a stronger income return will help total returns to 7.7% p.a., just behind industrial. The office sector is still coming to terms with the shift to remote work and total returns of 5.5% p.a. will leave offices as the worse performing sector by a wide margin.
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