We recently published a list of 10 Best Real Estate Stocks to Buy According to Billionaires. In this article, we are going to take a look at where CBRE Group, Inc. (NYSE:CBRE) stands against other best real estate stocks to buy according to billionaires.
In 2025, CBRE Investment Management sees the potential for global listed real estate to outperform broad equities and offer a differentiated total return as compared to the private markets. As per the firm, the listed real estate remains in the early days of a new upcycle, one where long-term yields remain range-bound, earnings continue to accelerate, listed capital market access remains abundant, and valuations can aid continued returns. In 2025, the listed real estate is expected to be characterized by accelerating organic earnings based on improved supply/demand throughout various sectors and access to capital supporting potential acquisitions and upside to estimates, among others.
Listed Real Estate- What’s Ahead?
CBRE Investment Management believes that a new cycle for listed real estate kicked off in Q4 2023 with the recognition of a pause in the rate hikes. The absence of hikes is expected to be powerful for listed real estate, even though there isn’t a strong fall in target rates themselves. Notably, real estate has performed well during periods of range-bound long-term yields. Over 2001-2007, the US 10-year bonds delivered between ~4% – 5%, and listed real estate managed to generate double-digit average returns. The investment firm also added that strong access to capital of listed real estate, versus more constrained private real estate participants, can be maintained moving forward.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Improved Earnings Growth Expected in Real Estate Sector
CBRE Investment Management sees earnings accelerating into 2025 across the real estate sectors. Globally, it expects 5% earnings growth, which is around double that of 2024 levels. Broad-based strength remains visible, with private-pay senior housing continuing to capitalize on powerful demographics and data center growth accelerating with generative AI. Also, the cell towers continue to gradually recover from customer churn, and retail and net leases have been performing, thanks to supply/demand and their prevailing capital costs.
The investment firm opines that the total return opportunity for REITs remains compelling. The listed real estate provides a ~4% dividend yield, which remains competitive versus private real estate income. This dividend continues to grow and is based on the conservative payout level. Amidst moderating central bank target rates as well as range-bound long-term yields, the firm believes that listed real estate is expected to prosper.
Our Methodology
We used the Finviz stock screener and Insider Monkey’s exclusive database of billionaire stock holdings to shortlist the companies catering to the broader real estate sector. We also mentioned the hedge fund sentiment around each stock, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A downtown skyline, highlighting a successful real estate services company.
CBRE Group, Inc. (NYSE:CBRE)
Number of Billionaire Investors: 11
Number of Hedge Fund Holders: 54
CBRE Group, Inc. (NYSE:CBRE) operates as a commercial real estate services and investment company. Jefferies upped the company’s stock to “Buy” from “Hold” with a price objective of $152, up from $133. Notably, the firm has a positive outlook on the commercial real estate services space for 2025. The upgrade is backed by CBRE Group, Inc. (NYSE:CBRE)’s leadership in the outsourcing industry, which is expected to fuel sales growth, with upside from capital markets activities. Elsewhere, Keefe Bruyette upped the price objective to $142 from $138, keeping the “Market Perform” rating. As per the analyst, heading into 2025, the capital markets’ momentum and stabilization of commercial real estate values place the broader commercial real estate finance sector for recovery.
Among CBRE Group, Inc. (NYSE:CBRE)’s notable strategic gains are integrating the project management capabilities into Turner & Townsend, its subsidiary, and acquiring the full ownership of Industrious, which is a provider of premium flexible workplace solutions. The company’s Building Operations & Experience segment is expected to unify building operations, workplace experience, and property management, placing CBRE Group, Inc. (NYSE:CBRE) to deliver scalable, future-ready solutions for offices, data centers, warehouses, and other facilities.
Baron Funds, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Leading commercial real estate services companies CBRE Group, Inc. (NYSE:CBRE) and Jones Lang LaSalle Incorporated (JLL) should benefit from structural and secular tailwinds: the outsourcing of commercial real estate, the institutionalization of commercial real estate, and opportunities to increase market share in a highly fragmented market. Looking forward, we believe we are in the early days of a rebound in commercial real estate sales and leasing activity. We believe CBRE and JLL may generate annual earnings per share growth of more than 20% in the next few years.”
Overall, CBRE ranks 3rd on our list of best real estate stocks to buy according to billionaires. While we acknowledge the potential of CBRE as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than CBRE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
