5 Best Real Estate Stocks To Buy

In this article, we discuss 5 best real estate stocks to buy. If you want to read our discussion on the real estate industry, head over to Real Estate Investing For Beginners: 11 Best Stocks To Buy. 

5. DigitalBridge Group, Inc. (NYSE:DBRG)

Number of Hedge Fund Holders: 31

DigitalBridge Group, Inc. (NYSE:DBRG) is an infrastructure investment firm that specializes in digital infrastructure assets, offering services to institutional investors. The company focuses on investments in data centers, cell towers, fiber networks, small cells, and edge infrastructure. DigitalBridge Group, Inc. (NYSE:DBRG) ranks 5th on our list of stocks pertaining to real estate investing for beginners. 

On February 20, DigitalBridge Group, Inc. (NYSE:DBRG) reported a Q4 non-GAAP EPS of $0.10 and a revenue of $350.31 million, outperforming Wall Street estimates by $0.14 and $179.39 million, respectively. Revenue for the quarter increased 29.2% on a year-over-year basis. 

According to Insider Monkey’s fourth quarter database, 31 hedge funds were long DigitalBridge Group, Inc. (NYSE:DBRG), compared to 21 funds in the prior quarter. Charles Akre’s Akre Capital Management is the largest stakeholder of the company, with 4.40 million shares worth $77.2 million. 

Ave Maria Focused Fund made the following comment about DigitalBridge Group, Inc. (NYSE:DBRG) in its Q3 2023 investor letter:

“DigitalBridge Group, Inc. (NYSE:DBRG) started its life with particularly complicated financials as the two data center businesses it owned directly obfuscated the economics of its asset management business. However, DigitalBridge plans to divest enough of their ownership in these two businesses that they will no longer be required to consolidate them in their reported financials. Consequently, its reported financials will be much simpler to analyze and reflect the profile of a pure-play alternative asset manager. DigitalBridge differentiates itself by focusing exclusively on digital infrastructure, an asset class that institutional allocators are severely under allocated to. DigitalBridge is actively fundraising for its third flagship investment fund. With an expected 11-year fund life, this fund could generate fees for the company and its investors for a long time.

We are confident that these three alternative investment managers will grow their respective businesses substantially over the next five years. This should provide ample growth in their stock prices and, consequently, the Fund’s positions in them.”

4. CoStar Group, Inc. (NASDAQ:CSGP)

Number of Hedge Fund Holders: 36

CoStar Group, Inc. (NASDAQ:CSGP) provides information, analytics, and online marketplace services to various industries, including commercial real estate, hospitality, residential, and related professionals. On February 20, CoStar Group, Inc. (NASDAQ:CSGP) reported a Q4 non-GAAP EPS of $0.33 and a revenue of $640 million, outperforming Wall Street estimates by $0.01 and $5.72 million, respectively. CoStar Group, Inc. (NASDAQ:CSGP) ranks 4th on our list of stocks aimed at real estate investing for beginners. 

According to Insider Monkey’s fourth quarter database, 36 hedge funds were bullish on CoStar Group, Inc. (NASDAQ:CSGP), same as the prior quarter. Charles Akre’s Akre Capital Management is the largest stakeholder of the company, with 7.25 million shares worth $634 million. 

Conestoga Mid Cap Composite made the following comment about CoStar Group, Inc. (NASDAQ:CSGP) in its Q3 2023 investor letter:

“CoStar Group, Inc. (NASDAQ:CSGP): This company serves the commercial real estate and apartments markets with software services to brokers and other industry participants. CSGP’s extensive database of properties around world holds a dominant position as the go-to resource for information to analyze and evaluate offices, industrial and commercial properties, as well as rental apartment buildings. The company reported 2Q23 results that missed expectations on revenues but beat on earnings. Further, CSGP guided for lower revenues in the full fiscal year as higher interest rates are expected to impact the commercial real estate market and create uncertainty.”

3. KE Holdings Inc. (NYSE:BEKE)

Number of Hedge Fund Holders: 39

KE Holdings Inc. (NYSE:BEKE), based in China, operates an integrated online and offline platform for housing transactions and services. The company has four segments – Existing Home Transaction Services, New Home Transaction Services, Home Renovation and Furnishing, and Emerging and Other Services. KE Holdings Inc. (NYSE:BEKE) expects total net revenue for the fourth quarter of 2023 to range between RMB18.0 billion and RMB18.5 billion. This projection reflects an estimated increase of 7.5% to 10.5% compared to the same quarter in 2022. The forecast takes into account the potential impact of recent real estate-related policies and measures, acknowledging their uncertainty and the possibility of affecting the company’s operations.

According to Insider Monkey’s fourth quarter database, 39 hedge funds were bullish on KE Holdings Inc. (NYSE:BEKE), compared to 37 funds in the last quarter. Lei Zhang’s Hillhouse Capital Management is the largest stakeholder of the company, with 29.2 million shares worth $473.7 million. 

Artisan Developing World Fund made the following comment about KE Holdings Inc. (NYSE:BEKE) in its second quarter 2023 investor letter:

“Bottom contributors to performance for the quarter included real estate platform KE Holdings Inc. (NYSE:BEKE). Beike fell due to weaker industry property sales in China in April following the release of strong pent-up demand in Q1, despite accelerating revenue and very modest cost growth.”

2. CBRE Group, Inc. (NYSE:CBRE)

Number of Hedge Fund Holders: 49

Ranking 2nd on our list of stocks for real estate investing for beginners is CBRE Group, Inc. (NYSE:CBRE), a global commercial real estate services and investment company. Its Advisory Services segment provides strategic advice, leasing, property sales, and valuation services. The Global Workplace Solutions segment offers facilities and project management services. The Real Estate Investments segment provides investment management and development services. 

On February 15, CBRE Group, Inc. (NYSE:CBRE) reported a Q4 non-GAAP EPS of $1.38 and a revenue of $8.95 billion, outperforming Wall Street estimates by $0.20 and $510 million, respectively. 

According to Insider Monkey’s fourth quarter database, 49 hedge funds were bullish on CBRE Group, Inc. (NYSE:CBRE), compared to 40 funds in the prior quarter. Harris Associates is the largest stakeholder of the company, with 16 million shares worth $1.5 billion. 

Baron Real Estate Fund stated the following regarding CBRE Group, Inc. (NYSE:CBRE) in its fourth quarter 2023 investor letter:

“Our other real estate-related opportunities category includes three investment themes and various companies that do not fit neatly in our traditional REIT, residential-related real estate, and travel-related real estate categories. They currently include three investment themes: Commercial real estate services companies Examples: CBRE Group, Inc. (NYSE:CBRE) and Jones Lang LaSalle Incorporated.

We remain bullish on the long-term growth opportunity for the commercial real estate brokerage category because of structural and secular tailwinds that should benefit leading global companies such as CBRE and Jones Lang LaSalle.

Tailwinds include: • The outsourcing of commercial real estate: A growing number of companies are increasingly looking to outsource their commercial real estate needs. CBRE estimates that the overall facilities management market will be $1.9 trillion in 2024, representing a massive growth opportunity for large global commercial real estate services companies. • The institutionalization of commercial real estate: Institutional allocations to real estate continue to increase, in part due to real estate’s diversification, inflation protection, and stable long-term growth attributes. • Opportunities to increase market share: The commercial real estate industry remains highly fragmented and is likely to continue to consolidate. Customers tend to prefer commercial real estate companies that can provide a broad set of services. We believe CBRE and Jones Lang LaSalle are best positioned to drive market share gains given that they are the clear #1 and #2 commercial real estate services firms, respectively, and they have the capability to provide the full array of real estate offerings on a global scale.

CBRE and Jones Lang LaSalle have scale, product breadth, and leadership positions across their diversified real estate business segments. They continue to gain market share and are well positioned to capitalize on ample attractive acquisition opportunities in the years ahead given strong and liquid balance sheets. Though growth in certain segments of their businesses has slowed and is likely to remain under pressure in the months ahead due to the global economic slowdown, higher interest rates, and the likelihood of more restrictive bank lending, we believe both are attractively valued and present compelling return potential over the next few years.”

1. Zillow Group, Inc. (NASDAQ:Z)

Number of Hedge Fund Holders: 65

Zillow Group, Inc. (NASDAQ:Z) operates real estate brands in the United States through mobile applications and websites. The company provides services, including premier agent and rentals marketplaces, new construction marketplaces, advertising, display advertising, business technology solutions, mortgage originations, sale of mortgages, and title and escrow services. In the fourth quarter of 2023, Zillow Group, Inc. (NASDAQ:Z)’s revenue amounted to $474 million, surpassing the average analyst estimate of $451.4 million. Zillow is one of the top stocks to buy for real estate beginners. 

According to Insider Monkey’s fourth quarter database, 65 hedge funds were bullish on Zillow Group, Inc. (NASDAQ:Z), compared to 52 funds in the earlier quarter. Dorsal Capital Management is a prominent stakeholder of the company, with 3.05 million shares worth $176.4 million. 

Here is what Baron Asset Fund has to say about Zillow Group, Inc. (NASDAQ:Z) in its Q4 2021 investor letter:

“Real Estate investments detracted the most from relative performance, with real estate marketplace Zillow Group, Inc. accounting for all of the weakness. Zillow unexpectedly announced that it was exiting its home buying business, as it became apparent that the company had overpaid for many homes. We were surprised and disappointed by these developments and decided to exit our position in the company.

Zillow Group, Inc. operates the leading residential real estate websites in the U.S. In 2018, Zillow entered the iBuying market through its Zillow Offers unit, which purchased and resold homes, while also providing title, escrow, and mortgage services. By 2020, Zillow Offers had grown rapidly, was available in 25 markets and generated $1.7 billion in revenues. We were excited by the rapid growth in this business segment, and we believed that it could become a significant contributor to Zillow’s overall profitability. In November 2021, Zillow unexpectedly announced that it was exiting the home business, as it became apparent that the company had overpaid for a large number of homes, leading to a $500 million write-off. Their explanation for this shocking development was that the valuation algorithms they had developed had made dramatic errors. We were surprised and disappointed by these developments, which caused us to lose conviction in the company’s management and strategy. We exited the position during the quarter.”

Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily enewsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also check out 13 Best Diversified Dividend Stocks To Invest In and 16 Best Financial Stocks To Buy According to Hedge Funds.