Goldman Sachs has refreshed its stance on a set of European real estate names following a review of first-quarter results, elevating Segro and trimming its view on Castellum.
The bank upgraded Segro from Neutral to Buy and lifted its price target on the logistics and data-centre specialist to 900 pence from 800 pence. Goldman said it now expects demand to be stronger than the trends seen in Q1 implied, pointing specifically to incremental activity from Asian and food retailers. The team also noted that earlier increases in interest rates had weighed on Segro's share price and created a more attractive entry point for investors.
Conversely, Castellum was moved down to Neutral from Buy. Goldman pointed to the company's strong share performance since January 22, which the bank estimates has outpaced its European real estate coverage by roughly 20%. That rally was attributed to corporate actions such as disposals at or near book value and share buybacks.
"Castellum's shares have outperformed our U.K. and European real estate coverage by c.21.5% YTD, and we now see 16% potential upside to our revised 12-month price target of Skr146 vs. 19% average upside for our coverage," the analysts, led by Jonathan Kownator, wrote.
Beyond individual names, Goldman's analysts struck an overall constructive tone on the sector even as investors debate a range of demand-side risks. The team argued that many of the market's worries - from AI-related disruption to office demand, to consumer weakness affecting retail, to regulatory pressure on residential investment - focus primarily on demand and miss an important supply-side shift.
"Higher construction costs, funding costs and regulation are driving a rapid collapse in new supply," the analysts said, adding that this dynamic is likely to grant pricing power to landlords who are well positioned.
On valuations, Goldman flagged the sector as "the cheapest vs. its history by some margin" relative to the wider market and noted that correlations to real rates have been breaking down. The bank's forecasts call for average earnings growth of around 2% in 2026 across its coverage, accelerating to 6% in 2027, alongside an expected dividend yield of 5.5%.
Goldman's strongest convictions lie in logistics and data centres: it carries Buy ratings across all exposed names, explicitly citing CTP, Merlin, WDP, Tritax Big Box and Segro. The analysts also highlighted Vonovia as a preferred pick, especially in a scenario of falling interest rates, and identified Unibail-Rodamco-Westfield and Klepierre as potential beneficiaries of retail resilience driven by limited new supply.
At the other end of the spectrum, Goldman kept Sell ratings on a group of Nordic and secondary office-exposed names, including Entra, Fabege and Icade, and also maintained a negative stance on self-storage operator Big Yellow.
What this means
- Goldman's upgrade of Segro signals increased conviction in logistics and data-centre demand versus the bank's prior expectations.
- The downgrade of Castellum reflects strong recent share performance and a reduced relative upside to Goldman's revised target.
- The analysts underscore a supply-driven argument for landlords, noting that reduced new-build activity could strengthen pricing power despite demand-side concerns.