All-property capital values edged up by 0.1% in Q1, marking the first increase since mid-2022. Meanwhile, appraisal-based cap rates were flat after compressing by a slight margin in Q4 2024. We still believe appraisals have further to fall given the narrow spread to risk-free rates. That should take the peak to trough decline in values to over 20% by end-2025. At the sector level, we think office values will eventually fall by 45% from their peak, retail and apartments should be the top performers over 2025-2029.
We suspect southern metros will continue to outperform the six major markets and west coast metros, as the South benefits from stronger population and employment growth.
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