BofA sees upside potential for European real estate; ups LondonMetric, Shurgard

European real estate stocks have the highest upside potential in decades, BofA Research says, with valuations at 20-year lows while returns on equity have doubled to match cost of capital

The broker projects multiple re-ratings and upgrades LondonMetric LMPL.L and Shurgard SHUR.BR to "buy", based on high earnings growth and attractive valuations

On the other side, BofA double-downgrades Colonial COL.MC to "underperform" from "buy" seeing a limited upside, as the company's shift into life science offices and overseas markets presents a riskier and less focused business

It says political uncertainty and fewer big deals in France could push Colonial's office yields higher, while too much supply in Paris is likely to slow rent growth in 2026

BofA also cuts Segro SGRO.L, British Land BLND.L and Great Portland GPEG.L to "neutral" from "buy" after their shares' strong runs, and says higher UK rates make low rental returns less attractive as rental growth is normalising