UK Real Estate View - The emergence from lockdown

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Covid-19 and the resultant economic impacts represent a genuinely unprecedented set of circumstances in which to forecast real estate equity returns. Confidence in forecasting against a single scenario is low and there is a wide selection of plausible outcomes.

High-frequency economic indicators are currently suggestive of an upside “v-shape” recovery globally. However, identified risks make a slower recovery possible: persistent unemployment and what happens after the cessation of
furlough; corporate delinquency; future virus waves and lockdown policy; and the timing and effectiveness of vaccines and treatments. The UK faces the additional complication with the ending of its transition period with the
EU in December 2020, which has the potential to slow the pace of recovery.

Capital value declines, as measured by the MSCI Quarterly Digest, have registered -5.4% over the first half of 2020. Industrial was relatively stable at -1.5% while retail values have declined by -11.1%

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