Total returns of -1.8% q/q in Q1 reflected a much smaller markdown in values than in Q4. But, looking ahead, we remain convinced that the strains being felt by many investors will drive sharper price declines in the next couple of quarters. Cap rate rises are set to re-accelerate and NOIs will suffer, especially in the office sector. The retail sector will not be immune from further price falls, but Q1’s outperformance is in line with our view that retail offers the best returns prospects on both a 1 and 5-year basis.
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