LONDON (ShareCast) - Real estate stocks were among the worst performers on Tuesday after some gloomy comments from Deutsche Bank, which downgraded a collection of companies under its coverage.

The German bank cut ratings for UK-listed property peers Land Securities, British Land, Great Portland Estates, Intu Properties, SEGRO and Derwent London on concerns over the impending tapering of US stimulus.

Each one of these stocks were registering moderate falls in afternoon trade.

“We find that liquidity drives the relative performance of the quoted property sector much more than short-term interest rates or bond yields,” Deutsche Bank said.

“With the US Federal Reserve likely significantly to reduce the supply of liquidity to the global financial system over the next 12 months, we expect property shares to underperform accordingly.”

Meanwhile in a review on the European real estate sector, JPMorgan Cazenove said that it sees 15% potential upside after recent falls as the listed sector looks slightly oversold.

However analysts said to “expect underlying momentum to slow” due to fading central bank support, a recent rise in the cost of capital and an expected small downturn within three years.

The report, titled ‘The Great Rotation’, the US bank recommends investors to rotate out of current investment themes (“prime vs secondary; sell Spain and continental retail vs UK”) and increase exposure to infrastructure projects, industrial and Spainsh/Dublin offices. It also expects the “West End magic” – a source of strong growth for London-focused real estate firms - to fade after the next 12 months.



Top performing sectors so far today
Forestry & Paper 11,191.44 +1.66%
Mining 16,916.25 +0.95%
Fixed Line Telecommunications 3,884.80 +0.47%
Gas, Water & Multiutilities 5,797.12 +0.47%
Electronic & Electrical Equipment 4,146.73 +0.39%

Bottom performing sectors so far today
Mobile Telecommunications 4,737.82 -4.69%
Real Estate Investment Trusts 2,329.65 -1.47%
Real Estate Investment & Services 2,471.09 -1.37%
Industrial Metals & Mining 1,489.56 -0.96%
Insurance (non-life) 1,727.06 -0.59%

BC

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