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Investing.com -- Barclays downgraded Klépierre and Gecina to “equal weight” and cut Icade to “underweight” as the brokerage warned that political instability and weakening office fundamentals in France could continue to pressure the real estate sector into 2026, in a note dated Monday.
Barclays said France has faced a lack of recovery in business confidence this year, alongside a further rise in OAT yields, weighing on stock valuations.
Barclays said these pressures may extend into next year, particularly for office-exposed landlords, as vacancy rates and incentive levels in Greater Paris climb to historic highs.
Gecina , previously rated “overweight,” was cut to “equal weight.” Barclays said the outlook for 2026 is more muted as lower indexation flows through, surrender premiums fade and lease maturities, including in Boulogne, need to be addressed.
With no development completions scheduled before year-end, the bank said Gecina’s 2026 revenue growth will rely largely on external acquisitions. It expects EPS of €6.73 for 2026, in line with consensus.
The brokerage also flagged 2027 as a critical year when Engie’s mid-year lease expiry begins to impact income by an annualised €40 million. Barclays lowered its target price to €81 from €110, citing caution toward the current leasing environment and raising its equity risk premium for French offices to 10%.
Klépierre, also previously”overweight,” was downgraded to “equal weight.” Barclays said the company has no fundamental issues but sees less upside after recent share performance.
It noted that Simon Properties’ €750 million convertible bond on Klépierre shares, maturing in November 2026 and “well into the money,” is likely to dominate investor discussions next year. The bank said the instrument could influence share price performance and raise questions on Simon Properties’ long-term commitment as the largest shareholder.
Klépierre trades on an 8.2% FY25E EPS yield, with a 3% 5-year EPS CAGR. The target price remains €34.
Icade was double downgraded from “overweight” to “underweight” as Barclays cited continued uncertainty around the company’s planned exit from its healthcare portfolio.
The sale to Praemia has been delayed, and the bank pointed to industry-wide outflows from French real estate funds, making execution of the transaction in 2026 difficult.
The brokerage also flagged a challenging leasing outlook, negative reversion and falling operating margins, alongside further expected valuation declines in offices.
Barclays now forecasts a lower dividend payout ratio of 55% and reduced its EPS estimates by 5% on average for 2025-29. It cut the target price to €18 from €25, citing a higher equity risk premium of 12% for core assets and 14% for non-core assets.