Equity Analysis /
United Kingdom

GB : Property Management - February capital values allays fears of slowing property values

    Chris Spearing
    Chris Spearing

    Analyst - Real Estate

    Contributors
    Hugh Carrow
    Tom Musson
    CGS-CIMB
    25 March 2022
    Published by

    All Property total returns for February were +1.4% (+2.7% YTD) which wasn’t reflected in the FTSE EPRA/Nareit UK REITs index, which fell another -2.6% (YTD -6.6%). Capital values grew +1.1% in February driven by -5bp fall in yields (5.32% equivalent yield) and an increase in rental values, up +0.4%. Industrial and Retail Warehousing continued to drive values at the All Property level. While both expectations of higher interest rates and Russia / Ukraine tensions have weighed on share prices YTD, in the context of wanting to own stocks with strong underlying property fundamentals and strong pricing power, we continue to believe share price de-ratings have presented attractive entry points for a number of our structural growers: HWG, BBOX, SAFE and SGRO.