The past few months saw the UK economy slam by three tornadoes: Brexit, a slowing world trade, and downtrending retail figures.
A lot of these economic stress are channeling into the UK property sector. Flatlining real incomes, for example, (see figures from ONS) mean households are tightening belts by searching for the cheapest goods such as going online. This is hitting swathes of physical retail stores.
Intu (INTU), one of the largest shopping centre landlords in the UK, is feeling the acute pain. Its share prices are collapsing into record lows as investors flee the stock (see below). It appears that the firm’s equity value is fast vanishing.
Hammerson (HMSO) is another casualty. Prices have slumped from 560p to near 200p in over a year. Each support level appears to have turned into resistance once it is broken.
Land Securities (LAND) and British Land (BLND), two of the largest REITs, are also breaking down into new multi-year lows. The former just broke 800p support level whilst the latter breached the 500p support to the downside. When major round number levels give way, it signals that the supply-demand equilibrium is moving against buyers.
The only stock in the sector that is bucking the trend is Segro (SGRO), which rose into record highs just recently. This is because Segro is a warehouse speciality company that is benefitting from the online retail boom (see below).
Overall, pessimism is fast enveloping the UK property market. There are pockets of bullishness but these are insufficient to carry the sector. Expect further price declines among UK property-related securities over the medium term.
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Jackson has over 10 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world largest institutions and hedge funds.
Expertise: Global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University.