Valuation Index: Issue 6, Real Estate

This edition of the our Valuation Index focuses on listed property company shares, looking in particular at pricing compared to the underlying commercial property values.

For the most part, listed property company shares trade at a discount to their Net Asset Value (NAV). While valuations at a discount to NAV are not controversial, the justification for the severity that is often applied is open to debate.

With overall commercial property values flat-lining and demand for prime assets (many of which are owned by listed property companies) remaining high, there is an argument that the amount of discount to NAV applied does not sufficiently reflect the: asset management expertise; enhanced access to opportunities and finance; and the diversification of risk that listed property companies’ offer.


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