24.06.09

By David Doyle

Credit Suisse has raised its recommendation for UK commercial property shares to ‘overweight’ because ‘the UK economic momentum is better than any other developed country'.

Credit Suisse's global equity research team recommended buying Hammerson and British Land shares in a research note today.

It raised the recommendation on the sector from ‘Benchmark’ following effective monetary, banking and fiscal policy responses.

‘The UK real estate sector has underperformed its US equivalent by 30% since November 2008 and the price relative is close to its low,’ it said.

‘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.

‘In euros, UK commercial property is already down 57% from peak.

‘Property stocks are cheap on historic comparison (p/b [price-to-book value] and p/e [price-to-earnings] relatives are 44% and 11% below their 20-year averages) though more neutral on our models.

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Source: Property Week (www.propertyweek.co.uk)