The positive news on the vaccine has improved the economic outlook and should allow output in the Swiss and Scandinavian economies to recover to their pre-virus levels in late 2021. This will support the rental recovery. However, structural factors mean that it will be gradual. Indeed, although a faster online transition will boost industrial, it will be at the expense of retail. And more remote working will weigh on office markets, albeit this impact is likely to be smaller than in some other Western European markets. In turn, we expect property yields to be under upward pressure in the near term. But further ahead, the rental recovery, supportive valuations and low policy rates should allow office and industrial yields to fall. On balance, capital values will improve over the forecast horizon, but growth will be weak by past standards.
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