"Good morning and thanks for your continued vigilance.

"I notice that the FTSE UK Real Estate index is breaking above its September 2009 highs. This appears surprising on the basis of the strength of (or rather the lack of) in the UK economy. Have you any views on this matter as I do not feel the move is sustainable. I recently took a position as I felt that the technical picture may be right where as I may be missing something in my fundamental view.

"Would you also be able to update the chart as the back history is lacking and a lot of the candles are missing?"

Eoin Treacy's view Thank you for your kind words and for highlighting this interesting sector. The constituents of the FTSE-350 Real Estate Index were transferred to the real estate super-sector for the FTSE 350 in December 2009. The new index has all of the back history but only on a closing basis. This means that we cannot draw candles for the period prior to December 2009.

The Index topped out in early 2007, bottomed in early 2009 and has been ranging above 3000 since September 2009. It hit a new recovery high last week and a sustained move back below 350 would be required to question medium-term recovery potential. Land Securities, British Land, Hammerson, Capital Shopping Centres Group and Segro dominate the Index and yield 2.73%, 4.48%, 1.56%, 4.15% and 4.43% respectively.

Land Securities and Hammerson are performing in line with the Index. British Land is outperforming. Some of the smaller members of the Index have done considerably better. Derwent London (1.57%) remains in a consistent two-year uptrend and continues to find support in the region of the 200-day MA on reactions. Great Portland Estates (2.02%) and Shaftsbury (2.1%) have similar patterns.

From the above shares, some of the better performers have experienced yield compression as their prices have risen, which has perhaps made companies such as British Land, Capital Shopping Centres Group and Segro more alluring for yield hungry investors. A great deal of bearish news has been priced into this sector. In the current environment where inflationary pressures are rising, investors may once more look to property as a safe haven.

It is perhaps also noteworthy that there is a difference in how the above property investment companies are performing compared to regular home builders. Persimmon, Barrett Developments and Taylor Wimpey all remain within their bases and pay no or negligible dividends. This suggests that the focus of demand is on property investment companies with a yield rather than builders.

I performed a review of US home builders on February 18th which may also be of interest.