New Zealand's listed property market had started the year well with a gain of 5.2% for the three months ended March.
However, the index had underperformed the NZX50, which had returned 6.7% in the first quarter, Forsyth Barr broker Lyn Howe said in a research note.
The sector remained underpinned by improving asset values, defensive qualities and an attractive yield relative to bonds.
But it was fully priced on all valuation metrics.
Forsyth Barr's top picks were Kiwi Property and Augusta Capital and NPT Ltd.
Stride Property and Vital Healthcare were "relatively expensive'' but appealed in terms of attractive near-to-medium-term earnings relative to the sector.
"While the sector remains fully priced, an environment of net tangible asset [NTA] expansion and low interest rates highlights property could surprise again this year if its premium to NTA ratings holds.''
During March, Forsyth Barr had price target lifts for Kiwi Property and Goodman Property on the back of large lift in NTAs, and Augusta due to growth in assets under management, she said.
There was also a small lift in price targets for Precinct Properties and Vital Healthcare due to the time value of money on valuations. For Argosy, Forsyth Barr modelled recent development activity and the divestment of the vacant land.
There were no changes to investment ratings, Ms Howe said.
