Economic slowdown to drag average total returns below 7% between 2006 and 2009

Since the last Commercial Property Analyst, the evidence that the UK economy has entered a period of below-trend growth has hardened and the outlook looks even more gloomy than our already bearish forecasts suggested. Accordingly we have modestly revised down our rental forecasts. Table 1 shows that we now expect to see rental growth run at 1.9% y/y on average between 2006 and 2009, down from 2.2% y/y on the old forecasts.