The fact that real estate stocks lead moves in the underlying direct property market has been supported by recently updated research.

According to the latest paper published by the European Public Real Estate Association, conducted by US investment firm Cohen & Steers, the six-month lag has reduced to two months.

This decline comes as the direct property sector reacted more rapidly to the challenging economic environment.
 
Fraser Hughes, Epra research director, says: “It seems that the issues faced on the direct side – limited transactions and valuation adjustments – are, to some extent, being addressed proactively.”
 
Scott Crowe of Cohen & Steers adds: “Our study not only provides evidence that listed property markets lead direct property markets, but also adds to a mounting body of research that supports the idea that real estate stocks behave like real estate, not general equities, over the medium to long term. Yet they still offer investors better transparency and more liquidity.”