Canaccord Genuity has initiated coverage of the real estate sector and made Land Securities, British Land and Hammerson its top picks.
Analyst Charlie Foster said he expected Land Securities to perform best overall.
He said: “We expect Land Securities to lead in terms of growth at an NAV and total return level as its balance of exposure to Central London offices, shopping centres and retail parks provides geared upside from ongoing market level growth, while providing protection against cyclical downturn risks.”
Canaccord Genuity has given Intu and Segro ‘hold’ ratings – the former because of its concentration on shopping centres and exposure to some “relatively weak assets” and the latter because of its relatively expensive rating. Segro shares are currently trading at 413.9p, well-ahead of its latest reported NAV per share from the end of July of 333p.
Foster also said he was also watchful of the risk of overpricing across the sector.
“The current strength of investor demand for UK real estate is not all the sector’s own making,” he said. “Important attractions arise from extensive and loose monetary policy together with macro-economic and geo-political factors. We see no merit in being blind to these strong pull factors.”