The near-term economic outlook has weakened, with the Omicron variant posing further downside risk. Meanwhile, inflation is likely to be higher for longer. However, we expect it to fall back by 2023, allowing interest rates to remain low. This backdrop will support the property upturn, but with the outlook for office and retail still clouded by structural change, it is likely to continue at a slower pace than in 2021. Overall, we think industrial will keep its place at the top of the returns’ rankings in 2022. But, after a period of underperformance, retail is expected to be the winner on average over the 2022-26 period.
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