Structural change and higher rates still key to sector returns

The weaker economic growth outlook will weigh most heavily on the retail and apartment sectors, where we have made the largest downgrades to our rental growth forecasts. But the relatively small size of those revisions mean the impacts of higher bond yields and structural change will be more important drivers of sector performance in the coming years. We continue to think that the apartment sector will be the poorest performer over 2023-26, whereas retail should outperform.