'At a pivotal moment,' Jefferies reevaluates Europe's residential sector

Grand City Properties SA

08/09/2025 08:18

** Jefferies sees European residential sector at a "pivotal moment" after years of turbulence as investors switch their focus and high demand and tight supply push for rental growth

** As the era of growth via cheap debt comes to an end, investors now value solid balance sheets and sustainable cash flow generation over pure asset growth, the broker says

** Among residential-focused firms, it starts coverage of Balder BALDb.ST at "hold", and Kojamo KOJAMO.HE and Trianon TRIANb.ST at "buy"

** It also upgrades Grand City GYC.DE and Vonovia VNAn.DE to "buy" from "hold" citing current valuation and improving key metrics

** Demand/supply dynamics remain favourable thanks to structural drivers such as urbanisation, population growth in key cities, and supply is constrained by high build costs and regulation, it notes

** Jefferies also says that as transactions pick up and values stabilize, modest asset value growth is expected from 2025, but leverage should gradually improve, supporting investment capacity and easing interest coverage pressure

 (Reporting by Emanuele Berro)

 ((Emanuele.berro@thomsonreuters.com))