It’s been a positive start to the week for the FTSE 100 index, with property development stocks among the top gainers, potentially enjoying a period of release from pent-up demand from homebuyers and retail consumers. Highly sexual.
Financials also rose, with HSBC rising 9% after a Chinese insurance company increased its stake in the bank. Lloyds and NatWest Group both ended the day up more than 7%.
Land securities soar
Leading the way on Monday was Land Securities (LON:LAND), the UK’s largest commercial property development and investment company, with its shares up more than 8.30%.
The rise came even as the company reported consecutive periods of losses and followed many other companies in suspending its dividend to conserve cash amid the ongoing pandemic.
The company’s share price is now up 7.85% or 38.50p to 528.90p as of 28/09/20 12:30 GMT. Current price is 38% lower than today’s price one year ago.
Analysts currently maintain a “hold” stance on the Rand Securities stock, with a 12-month consensus price target of P732.14 per share. It has also been given an “underperform” rating of 54.31% by Marketbeat’s community and has an ap/e ratio of 8.77.
British Land Company grows rapidly
It was closely followed by fellow commercial property developer British Land Company (LON:BLND), which rebounded 7% on Monday morning.
This follows a similar underwhelming deal update for Land Securities, making it perhaps a difficult time for retail-focused commercial real estate landlords.
The company’s share price has now increased by 6.68% (21.50 pence) to 343.50 pence per share as of 12:30 Pence on September 28, 2020 (Japan time). This price is about 41% below the price on the same day last year.
Again, similar to Land Securities, analysts maintain a ‘hold’ stance on British Land, with an equal number of ‘buy’ and ‘sell’ ratings on either side. . The 12-month consensus price target is 471.62 pence, the MarketBeat community’s rating of “underperform” is 51.57%, and the AP/E ratio is 9.85.
Real estate developer outlook
Despite recent trading being more promising, the Times and FT have both published articles suggesting that recent price optimism is likely to subside in the coming months, with CEBR predicts that real estate prices could fall by up to 14% in 2021.
For commercial property developers, the impending possibility of a second lockdown is bad news as many tenants are waiting for the government to grant them a rent suspension or deferment. Big movers like Theo Paphitis are calling for business rates relief to continue indefinitely, and the growing shift towards digitalisation will also be difficult to manage.
