European real estate set for comeback next year, says JPM
12/12/2023 07:37
** J.P.Morgan says falling interest rates, people returning
to offices and a better environment for M&A could boost European
real estate companies next year
** "We note the rapid change in expectations around rate
cuts," says JPM, adding the market is now pricing cuts by the
BoE and ECB next year
** Public transport usage data in London and Paris mirrors
mandatory return to office announcements, JPM notes, adding
stocks like Derwent London DLN.L and Gecina GFCP.PA are set
to benefit
** It flags a potential "positive surprise" in UK industrial
capital growth, which should help warehouse and industrial
property developer SEGRO PLC SGRO.L
** M&A is back on the menu as debt costs fall, says JPM,
pointing to Gecina's GFCP.PA falling 2029 euro bond yields
** It flags positive trends in the German residential
sector, but says Vonovia's VNAn.DE rally makes it
"susceptible" to shocks, while upgrades Finnish residential
company Kojamo KOJAMO.HE to "neutral" from "overweight" on a
better rate environment
** However, deflation in food and clothing prices, without
volumes increasing, puts pressure on shopping mall owners such
as URW URW.PA and Klepierre LOIM.PA , it adds
** JPM flags stretched valuations at the likes of Sweden's
Castellum CAST.ST , Belgium's WDP WDPP.BR , and cuts VGP
VGP1.BR to "underweight from "neutral" on downside risk to
share price
(Reporting by Olivier Sorgho)
((Olivier.Sorgho@thomsonreuters.com))