Weak investment activity and continuing cap rate rises in Q1 fit with our view for another tough year for real estate. All-property values are now down by 17% from their mid-2022 peaks. But we still think cap rates need to climb by c. 80-100 bps to reach fair value. That would take the peak-to-trough decline to nearly 27% by end-2025. The structural hit to office demand will drive a total value decline of 43%, whereas retail stands out as the best performing sector for 2024-28.
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