The backdrop to our new real estate forecasts is a small reduction in our GDP forecasts and higher level of interest rates than previously. This weighs on the outlook, and we have trimmed our total returns expectations to 5.5-6.0% p.a. over the five-year forecast, with capital values growing by just 1% p.a. on average. We continue to expect offices to be the worst performer over the full 2025-29 period, with values still falling another 10% from Q3 2024 levels. Industrial will also fair poorly as appraisal-based cap rates still look too low. On the flip side, retail stands out positively, led by power centers with estimated total returns of about 8.5% p.a.
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