Property shares fell today, in spite of the wider rally in the UK stock market.
The European Public Real Estate Association index of UK property shares had dipped 0.5% by mid-afternoon, compared to a 4.75% rise in the FTSE 100 share index.
Among the big REITs, Segro fell 2.3% to 340p a share, Land Securities fell 1.7% to 1084p and Hammerson fell 1.2% to 799p. Liberty International rose 0.3% to 808p and British Land rose 0.2% to 676p.
Property analysts said the cool reception to property stocks was due to the fact that the government bail-out of UK banks was unlikely to trickle down to commercial property for some time.
“The priority of these lenders following capital injections is going to be to alleviate the problems in the residential mortgage sector and help the man on the street,” Harry Stokes, property analyst at Citi, said.
“Property investors are going to be bottom of the pile. This is coupled with the fact that there is a recession coming, and there is a question over whether tenants are going to be able to carry on paying their rent.”
The dip in property shares comes after a period of out-performance, driven by stakebuilding in major REITs and analysts such as Mike Prew of Nomura calling the bottom of the market.
The FTSE was buoyed by a sharp rise in financial stocks, following the news that other European governments would follow the UK’s lead and take measures to stabilise the banking sector.
Not all banks enjoyed a reprieve, however. Shares in Royal Bank of Scotland fell 17% to 60p, below the price at which the government would buy shares as part of its £20bn cash injection, as investors baulked at owning shares in a company that will be majority owned by the government.
Shares in HBOS, which will receive £12bn of government cash, fell 30% to 87p, as the terms of its proposed takeover by Lloyds TSB will be renegotiated.
