REITs dive after housebuilder capital warning

By William Kemble-Diaz

LONDON (Reuters) - Commercial property shares slumped to a four-year low on Tuesday after cash-strapped housebuilder Taylor Wimpey said it had failed to raise the extra capital it needed.

Analysts said the direct ramifications for the commercial property sector from the housebuilding sector's growing woes were limited but that Taylor Wimpey's problems reminded investors of the growing risks attached to real estate.

"Clearly it has had an effect in the short term," said a U.S. bank equity analyst on condition of anonymity, with the FTSE 350 real estate stock index down 3.1 percent at 12:23 p.m.

"The news reminds investors in the (UK) property sector of the likelihood that some property investors will go bust, with the likelihood that property sales stemming from property receiverships likely to drag down property prices further," he said.

Developers such as Mapeley and Minerva led the way down with double-digit percentage losses.

In contrast, mainland European property shares such as Unibail-Rodamco, IVG Immobilien AG, and Immofinanz posted gains of 1.7-3.2 percent.

Housebuilding and commercial property investment are separate sectors that are typically tracked by different sets of bank analysts. But there are parallels between the two.

Office, shopping centre, and warehouse property valuations have become overstretched after an extended debt-funded boom, in the same way house prices have.