The Mirvac Group (ASX: MGR) share price has been under pressure since the start of the year. The Aussie real estate investment trust (REIT) has fallen 33.33% lower and is underperforming the S&P/ASX 200 Index (ASX: XJO) by quite a margin.
However, coronavirus restrictions are starting to ease around the country and there’s now some hope of an economic uptick. That’s good news for Aussie businesses and individuals generally, but could it also mean the Mirvac share price is about to soar higher?
Is the Mirvac share price about to soar?
Shares in the Aussie REIT have been smashed in the space of a few months. I think the current $2.12 per share valuation reflects the uncertainty we’re seeing in the domestic and global economies.
And, across the sector, it’s not just Mirvac’s share price that has slumped lower in 2020. In fact, most of the Aussie REITs have shed billions in value in the wake of the pandemic.
One of the biggest concerns for investors is rental income. There have been very public stand-offs between retail tenants and their landlords. Mirvac is a major commercial real estate owner and developer which means it could be vulnerable to any changes in rent.
Clearly, COVID-19 restrictions have affected foot traffic in shopping centres. That’s piled pressure on the Aussie retail sector which was already struggling before the pandemic. However, with restrictions starting to be relaxed, there could be light at the end of the tunnel.
Hopefully, this is good news for the Mirvac share price in 2020. The big question is whether or not Aussies will continue to spend despite the tough economic times.
If the answer is yes, Mirvac could be set to benefit from better than expected earnings. The group’s residential real estate business may also benefit from low interest rates and continued demand for housing. Both of these levers could benefit shareholders in the form of sustained dividends.
Foolish takeaway
There’s no doubt the Mirvac share price is under pressure right now. I would say it’s far from certain where the REIT’s value will go from here.
On the one hand, we could see a recovery for Mirvac’s residential and retail assets. However, fewer workers in the city could be bad news for Mirvac’s office and industrial assets, and the economic climate remains uncertain.
The Mirvac share price could be set to soar, but I think it remains a speculative buy until we see the group’s earnings in August.
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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