Property valuations improved substantially in Q2, on the back of a huge 120 bps drop in equities earnings yields. However, while the office, retail and apartment sectors look undervalued on our valuation measure, with income streams likely to fall over the next 12 months as occupancy and rental values fall, we don’t think that this should be taken as a “buy” signal just yet. Indeed, we would expect valuations to improve further in the second half of the year, as the pricing correction continues and property yields climb further.
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