Real Estate Capital UK commentary
After a flat start to the year, UK REIT share prices have bounced up 7% since mid-February, making the UK market the best-performing globally in February, with a 6.6% total return.
Investors’ enthusiasm for the sector is thought to stem from a belief that commercial property will provide a hedge against inflation, although a recent Investment Property Forum research paper suggests that this is not strictly the case.
Share prices for British Land and Land Securities, the largest UK REITs, rose 13% and 12% last month, but have subsided a bit since the end of February.
Derwent London reported its full-year results on 10 March, registering a stellar 16% rise in the value of its portfolio. The central London office specialist attributed 60% of the increase to yield movements, with rental growth contributing 29% and asset management 11%.
Another central London specialist, Shaftesbury, raised £102m via a placing on March 4: the money will be used to buy assets in its core West End area, where it says opportunities are accelerating as leveraged investors face pressure to sell.