The coronavirus outbreak has transformed the economic outlook and is expected to hit commercial property hard. In the near term, we expect transactions, which are already slowing, to collapse and property yields to spike, as uncertainty over future rental growth peaks. Assuming the path out of lockdown continues as set out by the government, there should be early signs of recovery by the summer, though the risks will remain skewed to the downside. Over the next five years, we think all-property rental value growth will resume slowly, as economic growth recovers. As a result, capital value growth will also see consistent improvement. Overall, all-property returns will average 5.2% a year, which is relatively weak compared with recent historic averages.
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