UBS Equities-Global Real Estate Strategy _China driving global real estat...-113982036

ab7 March 2025Global ResearchGlobal Real Estate StrategyChina driving global real estate performance amid renewed regional disparitiesMonth in review The global real estate index has returned +2.3% boosted by Asia and outperforming global equities by 300bps. China (+16.1%) and Hong Kong (+6.0%) outperformed on the back of stabilising local property markets, with land prices in tier1 cities across China recently rising again. The global economic environment continues to be volatile, the US administration having now proposed at least $786bn worth of tariffs, compared to the $113bn implemented in 2018 which our economists view as a major risk to their economic outlook. Faced with tariff uncertainty and geopolitical concerns, Europe’s policies are turning more expansionary, driving a bond selloff that has impacted European REITs since month-end: their performance in the first week of March was the 5th worst in the last 10 years. Month in review – Healthcare top sectorHealthcare (+9.2%) continued to outperform, followed by Residential (+5.3%). Hotels (-4.4%) and Office (-1.7%) performed worst. By region, China (+16.1%) and Hong Kong (+6.0%) outperformed. Australia (-6.4%) underperformed, driven by its large caps (GMG -14% due to concerns from Deepseek's impact for data centers, SCG -7%).Global Valuation (excluding emerging markets)We estimate ~11% return for our coverage (end-Feb 2025) ex-EM, standing at a 8.4% discount to our NAV estimate, 2025E P/E at 19.4x, 2025E DPS yield at 3.8% and 2024-25E EPS growth of 6.2%.Global Top PicksCapitaLand Integrated Commercial Trust, UOL (SG); Kerry Properties, Swire Properties, Hongkong Land (HK); BEKE, CR Land (China); Mitsui Fudosan, Sumitomo Realty, Japan Metropolitan Fund, Advance Residence (JP); Dexus, Centuria Industrial, Charter Hall Retail, HomeCo Daily Needs (AU); Gecina, WDP, PSP (Cont. Europe); British Land (UK); Agree Realty, Invitation Homes, Kimco, Equinix, American Tower, JLL (US). For more details, our Global Real Estate Analyser summarises our regional positioning and top picks, harnessing the views of over 30 analysts covering 207 real estate stocks globally. Figure 1: Monthly regional and sector performance (to end February)Source: Refinitiv, UBS.This report has been prepared by UBS AG London Branch. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES, including information on the Quantitative Research Review published by UBS, begin on page 62. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.EquitiesGlobalReal EstateCharles Boissier, CFAAnalyst charles.boissier@ubs.com +44-20-7568 4415John Lam, CFAAnalyst john-za.lam@ubs.com +852-2971 6358Michael LimAnalyst michael-h.lim@ubs.com +65-6495 5902Kazufumi TakeuchiAnaly