Real Estate Shares Rocket On COVID-19 Vaccine News
At last, some good news. Shares in listed real estate companies made huge gains on Monday after drug company Pfizer revealed positive test results for its COVID-19 vaccine, with the possibility that doses could be ready before the end of the year.
Retail specialists and companies with big retail or hospitality exposures saw the biggest jumps.
In the U.S., Federal Realty Investment Trust shares jumped 30% in morning trading, Simon Property shares soared 24%, Macerich shares rose 23% and global retail investor Unibail Rodamco Westfield shares rose 23%.
Shares in UK retail REIT Hammerson rose 40%, West End landlords Shaftesbury and Capco rose 22% and NewRiver REIT rose 18%. Office and retail giants British Land and Landsec saw shares rise 26% and 19%, respectively.
Office landlords have not been hit by falling rent collection as hard as their retail peers, and office specialists also saw share prices rise.
In the U.S., SL Green shares rose 31%, Vornado shares rose 25%, Empire State Realty Trust shares rose 24% and Boston Property shares rose 19%.
In London, Derwent London shares rose 16% and Great Portland Estates shares rose 13%. Shares in listed flexible office provider IWG also rose 16%.
In other sectors hit hard by the pandemic, apartment REIT Equity Residential’s shares rose 17%, UDR shares rose 14% and Avalon Bay shares rose 11%.
In the UK, shares in student accommodation owners Unite and Empiric rose 10% and 12%, respectively.
The shares of companies in the pub, hotel, retail and cinema sector also rose dramatically.
On the other hand, property companies seen to have benefited from the pandemic saw shares make small declines. UK industrial REIT Segro’s shares fall 3%, while Prologis shares fell 1%.
There remain many hurdles to overcome before the coronavirus outbreak can be seen as receding in the UK and globally. Trials showed that Pfizer and German company BioNTech’s vaccine was 90% effective. But it needs to be stored at ultraslow temperatures of more than negative 60 degrees celsius, which will make the logistics of its rollout complicated.
Pfizer said it will only be able to make available doses capable of vaccinating 25 million people worldwide this year, with doses for 650 million people following in 2021.
But the hope is that these results will be matched by those of other drug companies working on vaccines, such as AstraZeneca and Oxford University in the UK.
And as the share price movements of real estate companies show, there is now real hope of light at the end of the tunnel, which could allow people's lives and the way they use property to return to something approaching pre-pandemic normality.
“Anything that gives people the confidence to go about their daily lives again will no doubt be a major boost for London’s office, retail and leisure landlords,” Peel Hunt analyst Matthew Saperia told the Evening Standard.
“What is not yet known is if the mass [work-from-home] experiment will result in permanent changing to working patterns,” Stifle analyst John Cahill said. “Ultimately we think the London office market will recover, with staff choosing to mix office and home working; flexibility will be more important than ever before.”
