Broker snap: Credit Suisse sees hope for property

24th Jun 2009 12:51

Credit Suisse has turned bullish on the UK commercial property sector in the wake of effective monetary, banking and fiscal policy responses.The Swiss bank has raised its rating on the sector from "market weight" to "overweight" in the belief that "the UK economic momentum is better than any other developed country.""The UK real estate sector has underperformed its US equivalent by 30% since November 2008 and the price relative is close to its low," Credit Suisse (CS) noted. "Commercial property prices have already fallen 44% (and futures are pricing in a further 13% decline) compared with a peak to trough decline of 27% in the early 1990s," CS said, adding that in euro terms, UK commercial property is already 57% down from its peak. CS believes sterling could rally to reach €1.25 against the euro."In our view, we are now seeing several hallmarks of a bottoming out in the UK real estate sector albeit if not yet a fundamentally recovering one," said Citigroup analyst Steve Bramley-Jackson. On an individual stock level Citi has recommended Hammerson and British Land as "buys". The former's price target has been lifted from 241p to 351p while the latter is tipped to rise to 453p, up from the previous price target of 366p.Elsewhere in the property sector, Cazenove has downgraded Land Securities from "outperform" to "in line".