Profit-taking put a damper on European property stocks in April after a stellar performance in March. But experts believe share prices will rise further in the near future due to the historically low interest rates set by the ECB.

Speculators reacted swiftly on 14 April after the news broke that Matthias Moser had been released from his duties as head of alternative investments at Patrizia, a position he had held since 2011. The share price of the German real estate investor subsequently nosedived, shedding 6.5% within a single day. 'We were surprised by the market reaction, since this decision was solely taken in order to further grow our business,' Andreas Menke, spokesperson for the Augsburg-based company, told PropertyEU.

Although Moser had been successful acquiring German residential properties for Patrizia, he was not the perfect choice for upcoming tasks, Menke explained. 'In the future, we want to invest throughout Europe in all real estate asset classes, not only in residential properties.' To that end, Patrizia aims to expand its board of directors with a Chief Investment Officer to lead the alternative investment division, Menke said.

Georg Kanders, analyst at Bielefeld-based private bank Bankhaus Lampe, does not believe the massive sell-off in Patrizia’s shares was only due to Moser's dismissal. 'Market participants were just waiting for an excuse to take profits in property stocks after a stellar run of the sector in March.'

Flat performance
After the ECB lowered its benchmark refinancing rate to 0.0% in March, European real estate stocks soared by an average of 6.7%, according to Global Property Research. In April, however, most European property stocks turned in a flat performance with German stocks, the biggest winners of the previous month, shedding 4.9%, followed by Dutch stocks with an average loss of 3.3%. By contrast, UK property stocks continued their upward march in April, gaining on average another 3.7% in euro terms after an increase of 4.2% in March.

Fears that a possible Brexit may force companies to move jobs from the UK to continental Europe and cause office and residential vacancy rates to rise and valuations to plummet sent UK property stocks tumbling by almost 20% in the first two months of this year. 'UK sector stocks had experienced such greatly exaggerated losses that a countermove was inevitable,' according to Philippe Kaufmann, Head of Global Real Estate Research at Credit Suisse.

In the coming months, the ECB monetary policy should give another boost to the share price of property stocks in the eurozone, said Patrick Nass, REIT Fund Manager at Stuttgart-based private bank Ellwanger & Geiger. 'Companies can refinance their debt at almost no cost, helping them to grow earnings and dividends and thereby attracting investors.'