2023-09-12 10:02:30
September 11, 2023 Today at 11:45
Kepler Cheuvreux pinpoints a series of “rays of light” for the listed real estate sector, which has been in depressed mode since the rise in interest rates. He looked at Belgian values.
We know that with the rise in interest rates, listed real estate is no longer in the odor of sanctity and investors stuck with such stocks cry brick-colored tears. In Brussels, Building
lost more than a third of its value in one year, Cofinimmo
30% et WDP
17%, while over the same time, the Bel 20 crumbled “only” by 2.2%.
The question that torments REIT shareholders is knowing when this downward cycle will stop. When, finally, will we see light once more in the stairwell?
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Revenues up, but results down for VGP
Rays of light
Kepler Cheuvreux, who has taken the pulse of this sector in bad shape, believes that the “sky seems to be clearing”. The negative correlation of real estate values with interest rates has not changed, notes the broker: the higher interest rates remain, the more the impact on businesses will begin to be felt.
Kepler remains a buy on VGP (price target of 102 euros), but has removed the stock from its list of favorites.
At this point, he adds, real estate remains overall the most “shorted” sector “(sale speculation, Editor’s note) for apparently obvious reasons, but “many rays of light have appeared”. He notes that the valuation of the sector is still close to its lowest levels, which interest rates might finally decline in 2024, as prices operational trends remained solid in the first half and that real estate returns have increased significantly.
Kepler therefore remains “cautiously optimistic” towards the sector but refrains from “gambling everything” before the first drops in interest rates.
Revised course objectives
As far as Belgian values are concerned, it remains for purchase on VGP
(target price of 102 euros), but removed the value from its list of favorites. The broker also adjusted its price target to the following values: Mountains
(“buy”; 83 euros, compared to 84 euros), Shurgard
(“buy”; 49 euros, compared to 55 euros), Xior
(“buy”; 33 euros, compared to 34 euros) and Ascencio
(“buy”; 54 euros, compared to 61 euros).
No change, however, for Building (“buy”; 71 euros), Care Property Invest (“buy”; 15.8 euros), Cofinimmo (“buy”; 83 euros), Home Invest Belgium (“keep”; 17.5 euros), Even (“buy”; 17.5 euros), Intervest (“keep”; 15 euros), Nextense (“buy”; 54 euros), Retail Estates (“keep”; 70 euros) and WDP (“keep”; 28 euros).
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