Rental falls intensify, but yield increases slow

While rental values fell sharply in May, this was in part offset by yields increasing at a much slower pace than the previous month. In turn, this led to a less steep fall in capital values, but annual returns remained negative. As the negative impact of the downturn will continue for some months, we expect rental values to reduce further. Combined with elevated investor caution in the near term, we think capital values will decline by over 10% in 2020.