Bears on the rampage in London 15 March 2016London Reporter: Drew Nicol
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Short sellers are turning their attention to London’s luxury property market after the five-year growth of high-end housing finally faltered, according to Markit.
Berkeley Group, whose developments are almost exclusively located within London and its commuter belt, was the main target of the bearish sentiment.
The developers outstanding shares on loan shot up to 6 percent in recent weeks.
“Short interest in Berkeley has since settled slightly to hit 5.2 percent of shares outstanding, but the pace of the reversal is rather stunning given that the current short interest is five times that seen at the start of the year,” said Markit analyst Simon Colvin in a research article.
“This bear raid, which comes at the heels of a 20 percent fall in Berkeley’s shares, represents the first time in over five years that short sellers took a position of more than 5 percent of shares outstanding in a UK listed homebuilder.”
Markit research shows that overall the property sector is slowing. The February Markit/CIPS UK Construction PMI Housing Activity Index showed that the sector registered the slowest rate of growth in nearly three years.
Colvin noted, however, that the rest of the UK’s property sector is yet to feel the full effects of this market shift as the average short position among the other 14 UK listed homebuilders stands at only 0.6 percent.
Only one other firm, Redrow, has seen more than 2 percent of its shares out on loan.
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