Forward-looking sentiment giving momentum to real estate equities

Real estate equities not only continued their re-rating from July during August but they actually accelerated.

Looking back, this is unsurprising given the improvements in virtually all macroeconomic data as well as in the forward-looking sentiment indicators over the summer period. However, for real estate, a traditionally late cycle earnings performer, share price performance has been driven not by the anticipated improvement in earnings (still someway off) but by investors’ appreciating the impact of continuing low base rates on what is still a much leveraged asset class. In the course of a relatively short period (a couple of months) consensus has switched from viewing leverage as a burden ...