GLOBAL - Real estate investment trusts (REITs) and other listed property companies could be in a position to "mount a startling about-turn in fortunes" as investors begin to allocate capital back to the sector, according to Reita.

The UK trade body said listed companies could benefit from a growing investor appetite for real estate acquisitions by offloading assets they expect to underperform.

"REITs are now in good shape financially and geared into a recovering market without the headache of a pile of uninvested cash," said Patrick Sumner, head of property equities at Henderson Global Investors and chair of Reita.

"The important thing in the next few years is to add value for shareholders through active asset management, new investment that plays to their competitive advantages and measured, well-timed development."

In contrast, however, analysts from HSBC have warned that UK REITs are grossly overvalued and have predicted that asset prices will fall by 9-16% next year as UK real estate enters a double-dip correction.

Against this uncertain backdrop, UK listed property companies would need to find £132bn  (€146bn) of new equity, according to HSBC analysts Nicolas Lyle and John Fraser-Andrews.

The UK property share index is up 100% since its low in March 2009, following a spate of successful rights issues, and is estimated to be trading at a 12% premium.

But Sumner said the premium seemed fair since he expected net asset value growth to be in double digits over the next 12 months.

He added that even the 20-30% premium at which London office specialists were trading might "fairly reflect their potential".

Francis Salway, chief executive of Land Securities was equally bullish. He said: "We are confident that, from the low point in July 2009, property values will rise over the next five years, with the profile characterised by ripples rather than pure straight-line growth as residual risks and imbalances in financial markets play out."

Elsewhere, the latest research from Real Capital Analytics (RCA) found listed property companies on a global scale are selling off assets far faster than they are buying them.

They have been behind 27% of all investment sales this year so far, comprising $45bn (€30bn) in dispositions.

RCA noted that, despite the growing volume of ‘distressed' real estate worldwide, the average listed company's disposal has not been "a fire sale of damaged assets", and said this was especially true of the UK where there had been a number of rights issues.

"Although many of these companies are selling some high-quality assets outright, in the UK and US they are using partial interest deals on trophy assets to maintain equity and bring in capital, especially as such trophies are holding value," the RCA report said.

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