Why the market is too pessimistic on REIT correction

Patrick Sumner, head of property equities at Henderson Global Investors, has warned investors the market is pricing in a substantial fall in property values across Europe.

Speaking at Investment Week’s Senate conference held in Cape Town, Sumner revealed analysts are forecasting a 15% fall in prices in listed UK property companies, with similar contractions in Germany and the Netherlands. However, he thinks the projections are overdone, and the attractive yield on offer has been overlooked. “I think the market in Europe will soften,” he said. “However, our view is the market is too pessimistic given a dividend yield of around 6%, which is reasonably attractive in this market.” As well as forecasting a price to NAV correction of 15.3% in the UK proper...