Goldman Sachs has become more pessimistic over the performance of UK property.
The investment bank has moved its sector stance on the UK quoted sector from “attractive” to “neutral” on the back of the UK market’s recent strong performance.
It said UK property stocks had risen on overinflated hopes of an office recovery and a UK REIT.
Analyst Jeppe de Boer said: “London office rents continue to decline and the UK real estate sector is only 9% off its all-time high. We believe the UK market has moved too quickly in anticipation of a recovery.”
Goldman has also downgraded Land Securities, the UK’s largest quoted property company, to “in-line” from “outperform” as it had reached its fair value.
The FTSE Real Estate index has risen 14% from 1,918 to 2,183 this year and de Boer said it was already too late for investors to take advantage of the optimism over a possible UK real estate investment trust.
“The UK real estate sector has performed just as strongly as the French real estate sector since mid-November last year. The major difference is that the French REIT structure is now in place, while the UK one is still only a possibility,” he said.
