Best choice in the real estate sector? UBS calls these two stocks born out of uncertainty

Investing.com – Under the current macro backdrop, factors such as rising bond yields, uncertainty around inflation, and geopolitical risks are putting pressure on the real estate sector, as the sector is particularly sensitive to financing costs and valuation.

However, UBS emphasizes that there are select opportunities on high-quality, low-leverage platforms, which have strong revenue visibility, especially in niche areas such as logistics and prime city assets.

Focus on companies that combine balance-sheet strength, resilient cash flows, and embedded rental growth. As interest-rate expectations evolve, these companies offer defensive exposure and asymmetric upside potential.

Shaftesbury Capital

Shaftesbury Capital stands out as a defensive, income-oriented investment. It has demonstrated strong resilience under uncertain conditions. The company benefits from a low leverage ratio (loan-to-value of about 17%) and high occupancy (around 97%); despite recent weakness in the share price, it still offers stability.

Its portfolio of prime assets in London’s West End provides embedded rental upside, while strong liquidity gives the company flexibility to deleverage or make opportunistic investments. With an implied yield of roughly 4.8% and limited financial risk, Shaftesbury is positioned as a safe-haven exposure to UK real estate, and the stock would be especially attractive if monetary policy begins to ease.

WDP (Warehouses De Pauw)

WDP provides high-quality exposure to the European logistics real estate sector with structural support. The company’s growth strategy targets about 6% annual growth by 2030, driven by long-term CPI-linked leases and a development pipeline with well-preleased projects, ensuring strong earnings visibility.

Its tenant base and asset quality provide resilience across the cycle, while strict balance-sheet management supports stability. WDP is positioned as a long-term growth compounder in real estate: it benefits from e-commerce and supply chain trends while maintaining defensive characteristics.

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