Capital value falls in March just the tip of the iceberg

Early signs of the impact of COVID-19 on property were seen in the MSCI monthly data for March. While rental values did not see much of a deterioration, yields saw their biggest rise since after the EU Referendum in 2016, causing capital values to fall by 2.4% m/m in April. As caution among investors is likely to persist in the near term, we expect transactions will slump in Q2 and yields will rise further, driving deeper capital value declines in the next few months.