COVID-19 scarring slow to heal

Effective vaccines provide a path out of the COVID-19 economic slump, but commercial property will be slow to benefit. On the bright side, the real estate downturn has been milder than expected and we appear to be past the worst. But we think yields will stay elevated, and that all-property rents will decline further and capital values will stabilise in 2021. And even as the economy returns to normal, it will bring only an insipid property recovery, with office and retail sectors dogged by structural change. This means that industrial performance continues to stand out, topping the rankings for returns over a five-year horizon.