UK real estate is a value trap and the sector could fall another 20%, according to Societe Generale (SG).
In a report on what Brexit will mean for real estate, SG said share prices are yet to stabilise. It described the sector as a ‘value trap’, saying the 2% premium to NAV on REITs is ‘still far from the average historic sector discount of 14%, and the 29% trough discount to NAV.’
SG added that the dividend yield in the sector, currently trading 3.8%, is too low compared to the 4.1% at trough historically, or 4.7% at trough since 2007 when the UK listed sector turned REIT.
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