Financial services firm JP Morgan Chase & Co has predicted strong results for European commercial property shares over the coming five years. The company suggests that such shares may rise 20 percent this year, since they are currently heavily undervalued. Land Securities, the UK’s largest REIT, came in for special attention as an attractive prospect.
The capital holds particularly good prospects for retail and office space. London – especially the West End – is a strong market. Some analysts expect capital values to rise by 3 percent per year for central London office space and 5 percent for retail, potentially leading to a huge increase in rental income.
Land Sec has seen good performance over the last two weeks, with shares at their highest for three months. However, JP Morgan also sounded a note of caution with its ‘worst case scenario’ report, which could see property prices decline by as much as 20 percent should deflation set in.