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Why momentum in some property shares is unjustified

The dive in equity markets last year threw up plenty of opportunities for investors to pick up some quality companies at heavily depressed valuations. That property stocks suffered some of the heaviest falls is not surprising. The March lockdown not only forced housebuilders to down tools, but sparked wider concerns about a collapse in house sales and prices. Meanwhile, forcing high-street stores to shut meant many retailers held back on paying rent, causing sharp falls in asset values. 

The prospect of reopening society has naturally kickstarted the biggest rally in the shares most severely punished by the economic impact of the pandemic. 

Since news of the Pfizer vaccine broke in early November, retail landlords Capital and Regional (CAL) and Hammerson (HMSO) have generated the highest total returns within the UK-listed real estate investment trust, housebuilding and real estate services sectors. The latter has come out on top since the start of this year, posting a return of almost 54 per cent, according to data compiled by FactSet.

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