(Bloomberg) -- UK property stocks are a value play, rather than a value trap, according to Morgan Stanley analysts.

After a tough year, the shares have become oversold, the analysts led by Bart Gysens wrote in a note, basing their argument on low levels of debt and adequately capitalized balance sheets.

“We are alive to the fact that broader UK exposure and offices as a sub-sector are out of favor, but at current valuation the risk-reward is compelling,” the analysts said. They upgraded Hammerson Plc to overweight on the back of progress made with its restructuring, sending the shares up as much as 4.8% in Monday trading.

UK real estate stocks have been unpopular this year as higher interest rates and a rising likelihood of recession have increased the negative risk to capital values and rental growth. The FTSE 350 Real Estate Investment Trusts Index is down about 8% year-to-date compared with the broad benchmark’s 0.6% gain.

Gysens argues that, while UK property stocks are more expensive on a net asset value basis than their continental European peers, this has proved to be a leading indicator for outperformance in the medium term.

Read More: UK Property Turmoil Reshapes Britain’s Benchmark FTSE 100 Index

Morgan Stanley’s optimism toward the sector isn’t universal, with the broker also downgrading Land Securities Group Plc to neutral, saying the stock’s valuation gap to overweight-rated peer British Land Co. is the widest ever.

JPMorgan Chase & Co, analysts take a contrary view on British Land, downgrading the stock to neutral and placing it on a negative catalyst watch due to an expected drop in City of London office values.

--With assistance from James Cone.

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