In what has been a bright start to the week for the FTSE 100 index, among the frontrunners of the top risers crib sheet were property developer stocks, who have likely enjoyed a period in which house buyers and retail consumers released pent-up demand.
There were also gains in financials with HSBC rising 9% after a Chinese insurer increased their stake in the bank. Lloyds and Natwest Group both finished the day over 7% stronger.
Land Securities soars
Leading the charge on Monday was the UK’s largest commercial property development and investment company, Land Securities (LON:LAND), who saw their shares rally over 8.30%.
This rally came despite the company reporting consecutive loss-making periods, as well as following the lead of many others, and cancelling its dividend to conserve cash during the ongoing pandemic.
At present, the company’s shares are up 7.85% or 38.50p, to 528.90p a share 28/09/20 12:30 GMT. The current price is 38% below where it was a year ago today.
Analysts currently maintain a ‘Hold’ stance on Land Securities stock, as well as a 12-month consensus target price of 732.14p a share. It was also given a 54.31% ‘Underperform’ rating by Marketbeat‘s community and has a p/e ratio of 8.77.
British Land Company booms
Following close behind, fellow commercial property developer, British Land Company (LON:BLND), posted a 7% bounce on Monday morning.
This, much like Land Securities, followed underwhelming trading updates, and what was likely a difficult time for retail-focused commercial property landlords.
The company’s shares are currently up by 6.68% or 21.50p, to 343.50p apiece 28/09/20 12:30 GMT. This price is short of where it was on the same day last year by about 41%.
Again, much like Land Securities, analysts maintain a ‘Hold’ stance on British Land, with an equal number of ‘Buy’ and ‘Sell’ ratings falling either side. It was also given a 12-month consensus target price of 471.62p, a 51.57% ‘Underperform’ rating by Marketbeat’s community, and a p/e ratio of 9.85.
The outlook for property developers
Despite recent trading being more promising, the Times and FT have both run stories suggesting that recent price optimism will likely subside in the coming months, with the CEBR predicting that property prices could fall by as much as 14% in 2021.
As far as commercial property developers are concerned, the looming potential of a second lockdown can only be bad news, with many tenants waiting for the government to grant rent holidays or deferrals. The increased shift to digitalisation will also be tricky to manoeuvre, with high street bigwigs such as Theo Paphitis calling for business rate relief to continue indefinitely.
