Only industrial escapes downgrades

While we expect the economic recovery to continue, there are downside risks in the next couple of years, particularly in the consumer sector. This will weigh on retail property, which we expect to be the worst-performing sector. The major change this quarter is to the outlook for offices, where we expect rents to fall across the next few years on the back of a wider adoption of remote-working. The outlook for these sectors will weigh on any pricing recovery next year, with all-property yields set to see only a small decline after this year’s 30-40 bps rises. Industrial will be the bright spot with returns of 7%-8% p.a. in 2020-24, although apartments should offer steady returns of 5%-6% p.a.