Bounce in European property stocks: false start or turning point?

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By Danilo Masoni MILAN (Reuters) - It's hard to be bullish about real estate in an environment of sharply higher interest rates. Yet unloved property ...

STORY CONTINUES BELOW THESE SALTWIRE VIDEOSMILAN - It's hard to be bullish about real estate in an environment of sharply higher interest rates. Yet unloved property stocks in Europe staged a surprise rally this summer, suggesting contrarian investors are starting to look past the worst.

Gerry Fowler, Head of European Equity Strategy at UBS, said bond yields in Europe seemed to have stabilised on bets the European Central Bank would hike interest rates just one more time in September, and that was starting to ease pressure on real estate companies while encouraging more investor interest.

"Some people this summer are making the bet that it's going to be all rosy. Inflation is going to come down, interest rates are going to come down and some of these structural problems of real estate will be solved," he said. Most investors are still steering clear. Bank of America's fund manager survey in August showed investors had capitulated with positioning falling all the way down to 2008 levels, but buying REITs was its top contrarian trade.

 

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