Property: better luck next year - Investors Chronicle

Property: better luck next year - Investors Chronicle

We don't see 2011 as being property's year. We have greater confidence in next year, with the Olympics and the associated publicity boost for the West End. Pending a major price change in either direction that would warrant an up- or downgrade, we rank almost all of the Reits as holds.

The three kings of West-End property - Derwent, Great Portland and Shaftesbury - trade at a premium. They can justify that, but it's hardly good value. The bigger Reits - Land Securities, British Land, Hammerson and Capital & Counties - meanwhile trade at around par. Investors are optimistic about central London rents and capital values, and there are also some development opportunities that may realise a lot of value. But that optimism is offset by fears about shopping as the public-sector cuts and the rise in VAT take effect. It's hard to be positive about the retail sector, when good retailers such as John Lewis and Primark are reporting weak trading and there is the prospect of interest rate rises by the end of the year.