Morgan Stanley sees stock picking opportunities in European property sector
21/03/2024 14:08
** Low dispersion in stock valuation suggests high dispersion
in future stock performance, which should be accelerated by
price discovery in real estate markets, Morgan Stanley says in a
note on European property, seeing stock picking opportunities
ahead
** Low stock valuation dispersion boosts the broker's
confidence in stocks that have solid capital structures,
allowing them to play offence, and that are exposed to
sub-sectors that see strong tenant demand
** MS sees a rate cut likely in the next quarter or quarters,
which could trigger a tactical rally with likely short-lived but
potentially meaningful outperformance from high beta continental
stocks
** Activity in private markets is returning, it adds,
expecting investment volumes to go up, which it sees will mainly
put pressure on low-yielding continental offices and shopping
centres
** The brokerage's preferred region is the UK, where it sees,
on average, more than 20% upside potential versus downside risk
in continental Europe
** It names warehousing and logistics (Segro SGRO.L , CTP
CTPNV.AS ), student accommodation (Unite UTG.L ), and storage
(Safestore SAFE.L ) its preferred sub-sectors, keeps
"overweight" on the stocks
** It upgrades Shurgard Self Storage SHUR.BR to
"equal-weight" from "underweight"
** It retains "overweight" on British Land BLND.L , Derwent
DLN.L , Great Portland Estates GPEG.L , Hammerson HMSO.L ,
and Land Securities LAND.L
** MS points out that German multi-family rental growth is
significantly less macro-dependent, naming LEG Immobilien
LEGn.DE its preferred pick among German residential
(Reporting by Marta Frąckowiak)
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