Real estate sector falls as Macquarie downgrades nine stocks
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The news: The real estate sector was the worst performing during afternoon trade as Macquarie analysts downgraded nine stocks on valuation grounds.
The numbers: Recommendations were downgraded for nine of the 24 stocks covered by Macquarie including Goodman Group, Scentre Group and Vicinity Centres.
By 2:39pm AEST shares in Goodman decreased 1.5% to $33.83, Scentre fell 1.6% to $3.69 and Vicinity dropped 0.98% to $2.52.
The wider real estate sector dropped 1.4% with the 22 biggest companies by market capitalisation all taking share price hits.
The context: Following strong price performance, Macquarie analysts downgraded Centuria Industrial REIT, Growth Point Properties Australia, Centuria Capital Group and Goodman Group from ‘outperform’ to ‘neutral’.
Charter Hall Retail REIT, Charter Hall Group, Charter Hall Long Wale REIT, Scentre Group and Vicinity Centres were downgraded from ‘neutral’ to ‘underperform’.
In their research note, the analysts said the real estate sector was trading at a premium to long-run average investment metrics, bar the price to net tangible assets ratio.
They flagged that asset values are “at risk based on relative returns and bid-ask spreads on limited transactional evidence”. However, sector earnings are expected to grow by 5.8% in financial year 2026, with retail and logistics presenting the best outlook.
The source: Macquarie research
