LONDON (ShareCast) - Large UK property stocks, which are already trading at demanding valuations, could be set for a temporary de-rating on the back of "more challenging macro conditions", according to analysts at Deutsche Bank.

"We on the property research team at Deutsche Bank see a real risk that the recent measures introduced by the European Central Bank do not do much to either ease monetary conditions or lower the euro exchange rate, and with full-blown Eurozone quantitative easing (QE) unlikely before next year at the earliest, we expect further tapering of QE in the US to contribute to macro-economic dislocation."

The bank pointed out that property majors in the UK and across Continental Europe are trading at valuations "that are nearly as demanding as those at the peak of the credit boom".

Among the UK-listed names, it sees the greatest downside to its price targets in Segro and Capital & Counties.

Nevertheless, it has raised its targets across the sector by around 10% after rolling forecasts forward one year.

"We anticipate that in 12 months' time, property share investors will be looking more favourably on retail property plays in the UK than on central London office plays, as rental growth emerges on the former and peaks on the latter."

BC

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