Goldman Sachs sees further decline in European property value

LEG Immobilien SE

11/10/2023 15:26

** Goldman Sachs says it expects an increase in real yields
and macro volatility to reduce transaction activity of
commercial real estate, clouding the recovery
    ** The brokerage forecasts drop in property values to
continue into the first half of 2024, with an average 7% fall to
trough (against 5% seen earlier)
    ** Office property values will decline the most, it says,
while values of logistics and self storage properties are more
resilient
    ** "We continue to see the Nordics as most exposed to
balance sheet risk, and highlight that debt duration remains a
key parameter to watch," it adds   
    ** It downgrades Colonial  COL.MC , CTP  CTPNV.AS  and Grand
City  GYC.DE  to "neutral" from "buy", and cuts Leg Immobilien
 LEGn.DE  and SBB  SBBb.ST  to "sell" from "neutral"
    ** The companies face a combination of a higher cost of
capital, recent outperformance and/or deteriorating
fundamentals, and high loan-to-value ratios, it says  
    ** However, the broker raises Supermarket Income REIT
 SUPR.L  to "buy" from "neutral", citing better relative value
in its defensive asset class and inflation-linked exposure
    

 (Reporting by Greta Rosen Fondahn and Jakub Olesiuk)
 ((greta.rosenfondahn@thomsonreuters.com))