Russia’s invasion will trim real estate returns
Our latest baseline forecast incorporates the economic impact of the Russia-Ukraine conflict, which has led us to downgrade our real estate forecasts, albeit relatively moderately owing to the mainly indirect transmission channels.
What you will learn:
- Differences in regional performance have widened, with returns in Asia Pacific and North America less affected, whereas the impact on Europe will be greatest. Our forecast for eurozone all-property total returns is now 2.8% lower by end 2025 than under the previous baseline.
- The impact within Europe varies, depending on trade and energy market links – we lowered returns in Germany, France, and CEE by more than in the UK and Nordics.
- The key transmission channel for commercial real estate, just as it is for the broader economy, is through inflation via squeezed real incomes lowering demand and raising yields.
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