The market value of REITs in the Eurozone jumped by €4bn (£3bn) last week after the European Central Bank’s €1.1trn quantitative easing (QE) package was unveiled.
Eurozone shares jumped by 4.7% in reaction to the news last Thursday (22 January), bringing the combined value of Eurozone REITs to €88.4bn, according to the EPRA Eurozone Index. UK REITs also benefited, with the combined market cap of companies on the EPRA UK Index rising 4.2% to €70.1bn.
Retail specialists were among the biggest movers. Profiting also from some positive retail sales and consumer-confidence figures, shares in Intu climbed by 6.6% and Hammerson by 6.2%.
The QE programme is widely expected to drive yields down further and increase investment activity on the continent.
Cushman & Wakefield predicted it could help spark a 20% increase in European property trading this year and a 40bp-70bp yield fall. Without it, the agents forecast only a 5%-10% rise in European investment and a 20bp-30bp yield shift.
However, some analysts have warned of over-exuberance. “For REITs the danger now is that as any remaining bears capitulate, the equity market begins to build in undeliverable expectations for REIT balance sheet growth,” said Jefferies analyst Mike Prew.
Initiating coverage of the sector this week, Cannacord Genuity also cautioned that the current strength of UK demand was “not all of the sector’s own making”.