A rally in listed European real estate during the final months of 2020 has left the sector within touching distance of its pre-Covid valuation – in stark contrast with activity in the US and Asia.
During the fourth quarter of last year, the value of listed real estate across Europe rose by 16.2%, or $78.1bn, to reach almost $560bn, according to the European Public Real Estate Association. That figure is just 0.7% below its value a year earlier.
Dilek Pekdemir, EPRA’s research manager, said: “The European listed real estate sector’s performance in the fourth quarter of 2020 showed it to be one of the most resilient in the world. The sector has managed to steadily recover from the heavy losses suffered in Q1, finishing the year in a particularly strong fashion.
“As we move into 2021, there are positive signs that recovery may well be underway, with the sector having managed to weather some of the worst impacts of the crisis.”
In the UK, listed real estate saw a near-$17bn growth in market cap during the fourth quarter – its strongest three-month performance of the year – allowing the market to take back the crown from Sweden as Europe’s largest listed real estate market, at $94bn.
“The UK’s listed real estate sector was one of the hardest hit by the Covid-19 crisis, with a portfolio heavily weighted towards assets such as retail and office,” Pekdemir said. “However, what we have seen since the losses experienced in the first quarter is a steady resurgence of the sector, culminating in a very strong fourth quarter.
“With the UK rolling out the Covid vaccine at breakneck speed, it may not be long before we see a further easing of restrictions. If indeed mobility does increase, the sectors’ strong fourth quarter performance looks set to continue into the new year, making the UK an attractive proposition for investors.”
Europe’s performance contrasts with that of listed real estate in North America and Asia, where values ended 2020 down by 6% and 11%, respectively, on their 2019 figures.
EPRA’s analysis suggests that Europe’s relative success is due to portfolios being heavily weighted towards residential and industrial real estate.
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