In this article, we discuss 11 best real estate stocks to buy. If you want to skip our discussion on the real estate industry, head over to 5 Best Real Estate Stocks To Buy.
The global real estate market is grappling with challenges such as inflation, potential recession risks, and geopolitical uncertainties. The efforts of central banks to curb inflation are gradually proving effective, giving rise to a prevailing sentiment that interest rates may have reached their peak. Nevertheless, the lingering impact of recent policies introduces uncertainty, and economic growth is expected to moderate in 2024. Despite the anticipation of a soft landing, the resilience of many economies globally suggests that policy rates will likely remain elevated well into 2024. Lagged effects from monetary tightening, coupled with geopolitical instability and election uncertainties in major economies, pose additional potential risks to the real estate outlook.
According to Jones Lang LaSalle Incorporated (NYSE:JLL), a prominent real estate firm, inflation is subsiding in major economies, providing increased predictability in consumer and producer prices, including construction costs. The pandemic-related disruptions, including shifts in consumer shopping habits, international trade, and e-commerce, have largely settled. As a result, logistics demand is aligning more closely with historical growth trends. Office utilization has improved globally, particularly in Asia and parts of Europe, and the United States is witnessing a gradual return to office mandates. This return is expected to increase incrementally in 2024, revitalizing Central Business Districts (CBDs) with renewed daytime foot traffic and retail demand.
Opportunities for growth exist in specific sectors and geographical micro-markets. Distress and portfolio rebalancing efforts present opportunities for investors. JLL observed that the Living sectors, driven by an expanding world population and long-term structural trends, are expected to remain a bright spot in 2024 and beyond. The emphasis on regionalization and local manufacturing is set to continue, with the evolving global landscape of government incentives driving demand for industrial and logistics facilities. Retail is poised for a comeback in 2024, with investors returning to a sector that has transformed its dynamics to offer attractive returns and renewed rental growth. In the data center market, the global forecast points to rapid growth, driven by the evolving adoption of artificial intelligence. For real estate occupiers, 2024 is a year to solidify workplace policies, align portfolio strategies with new ways of working, and upgrade existing facilities. Focus on sustainability is intensifying, with many companies linking their future building demand to carbon commitments. The demand for low carbon workspace is expected to outstrip existing stock and the current development pipeline by 2030, presenting opportunities for sustainable building owners and developers.
In the next 12 to 18 months, the real estate industry will undergo a transformative period where firms are expected to reposition themselves. Deloitte’s 2024 Real Estate Outlook survey, based on insights from 750 CFOs and their direct reports in major real estate firms across 11 countries, sheds light on the challenges and strategies in the global real estate landscape. Key findings from the survey indicate that concerns about the economy will significantly influence real estate decision-making. Revenue expectations have declined for two consecutive years, and to address this, real estate CFOs are planning further expense reductions, particularly in talent and office space. Expectations for the real estate property sector’s fundamental conditions are the most negative since 2018. Worsening leasing fundamentals, including vacancies, leasing activities, and rental growth, are anticipated over the next 12 to 18 months. Respondents believe real estate capital markets may be approaching a market bottom, with expectations of worsening property pricing and transaction activity. Amid these challenges, property sector targets are shifting. Digital economy properties, such as data centers and cell towers, are seen as the most attractive risk-adjusted opportunity globally. Alternative sectors, including single-family rentals, build-to-rents, senior care, and life sciences, have gained ground in respondents’ preferences, while traditional sectors like downtown and suburban offices have dropped in attractiveness.
Against a mixed landscape in the real estate sector, some of the best stocks to buy for beginners include Zillow Group, Inc. (NASDAQ:Z), CBRE Group, Inc. (NYSE:CBRE), and CoStar Group, Inc. (NASDAQ:CSGP).
Our Methodology
For this article, we scanned Insider Monkey’s fourth quarter database of 933 hedge funds and picked 11 companies operating in the real estate services industry with the highest number of hedge funds. We refrained from picking REITs for this list. These are the best real estate stocks to buy according to hedge funds. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
Aerial view of a city skyline with a modern real estate development in focus.
Real Estate Investing For Beginners: Best Stocks To Buy
11. Anywhere Real Estate Inc. (NYSE:HOUS)
Number of Hedge Fund Holders: 22
Anywhere Real Estate Inc. (NYSE:HOUS) is a residential real estate services company operating globally through three segments – Anywhere Brands, Anywhere Advisors, and Anywhere Integrated Services. The company franchises well-known brands, operates a full-service brokerage business, and provides title, escrow, settlement, and mortgage lending services. While Anywhere Real Estate Inc. (NYSE:HOUS) remains a popular real estate play among smart investors, the company missed revenue and EPS estimates in Q4 2023.
According to Insider Monkey’s fourth quarter database, 22 hedge funds were long Anywhere Real Estate Inc. (NYSE:HOUS), compared to 21 funds in the last quarter. Angelo Gordon & Co is the leading stakeholder of the company, with 9.7 million shares valued at $78.6 million.
Like Zillow Group, Inc. (NASDAQ:Z), CBRE Group, Inc. (NYSE:CBRE), and CoStar Group, Inc. (NASDAQ:CSGP), Anywhere Real Estate Inc. (NYSE:HOUS) is one of the best real estate stocks for beginners.
Longleaf Partners Small-Cap Fund made the following comment about Anywhere Real Estate Inc. (NYSE:HOUS) in its Q2 2023 investor letter:
“Anywhere Real Estate Inc. (NYSE:HOUS) – Real Estate brokerage franchisor Anywhere was another solid performer in the quarter and for the first half, benefitting from “green shoots” in the seemingly bottomed-out US housing market. Management has maintained strong cost control, and even at this depressed level, Anywhere is producing net positive free cash flow (FCF) today with the potential for strong future franchise fee growth.”
10. Newmark Group, Inc. (NASDAQ:NMRK)
Number of Hedge Fund Holders: 24
Newmark Group, Inc. (NASDAQ:NMRK) offers commercial real estate services globally, catering to both investors/owners and occupiers. The company provides capital markets services, including investment, debt, and structured finance, as well as agency leasing, property management, and valuation. Newmark Group, Inc. (NASDAQ:NMRK) is one of the best stock ideas when it comes to real estate investing for beginners.
On February 22, Newmark Group, Inc. (NASDAQ:NMRK) reported a Q4 non-GAAP EPS of $0.46, missing market estimates by $0.01. The revenue increased 23.1% year-over-year to $747.4 million, exceeding Wall Street expectations by $3.87 million.
According to Insider Monkey’s fourth quarter database, 24 hedge funds were bullish on Newmark Group, Inc. (NASDAQ:NMRK), compared to 16 funds in the prior quarter. Empyrean Capital Partners is the biggest stakeholder of the company, with 4.36 million shares worth $47.8 million.
Here is what O’Keefe Stevens Advisory has to say about Newmark Group, Inc. (NASDAQ:NMRK) in its Q1 2022 investor letter:
“On 12/30/2021, at 4:04 pm, NMRK put out a press release saying, “On December 28, 2021, Newmark Group, Inc. awarded to Howard W. Lutnick, the Company’s Chairman and principal executive officer, a one-time $50 million bonus award (the “Lutnick Award”) in consideration of his efforts in delivering superior financial results. These efforts included his management of the company and success in creating value for the company’s stockholders in connection with structuring, hedging, and monetizing the Nasdaq, Inc. common stock (the “Nasdaq Shares”) held by the company and the significant amount of income earned by the company related to these activities and the significant increase in value of such Nasdaq Shares over time.
In 2013, BGCP sold their ESpeed trading platform to Nasdaq for $750m in cash and ~1m shares of NDAQ stock per year for 15 years. A clause in the sale agreement stated if Nasdaq were to sell the ESpeed platform, the remaining shares would immediately be granted to BGCP. In 2018 Newmark was spun-off from BGCP and was given the remaining shares of NDAQ to be received. In 2021, Nasdaq sold ESpeed to Tradeweb. Instead of receiving 1 million shares of NDAQ for the next seven years, they received ~7m shares at once. As mentioned above, hedging instruments were used; nonetheless, it was a significant windfall for NMRK.
A retroactive, one-time bonus was given to Howard because of the transaction. To clarify, NMRK’s Board of Directors gave Howard a bonus because Nasdaq sold the Espeed platform. Howard was not a part of the conversation between Nasdaq and Tradeweb and undoubtedly did not influence the transaction. $50m was approximately 1.3% of the market cap of NMRK at the time, and the value of the NDAQ stock received was ~$650m after taxes and forward agreements were settled. Roughly 8% of that value was given to Howard. When the original Espeed sale to Nasdaq occurred, NDAQ stock was trading in the $30’s, putting the original value of the shares to be received in the $450-500m range. From 2014-to 2021, NDAQ’s stock rose from $40 to $200. Did Howard have anything to do with this price appreciation? I think not. Did Espeed lead to value creation for NDAQ shareholders and potentially a source for the stock appreciation? Nasdaq paid $750m in cash + 15m shares of NDAQ and subsequently sold ESpeed to Tradeweb for $190m. Howard deserves some credit because he clearly got a phenomenal price for ESpeed…’” (Click here to see the full text)
9. Jones Lang LaSalle Incorporated (NYSE:JLL)
Number of Hedge Fund Holders: 25
Jones Lang LaSalle Incorporated (NYSE:JLL) is a global commercial real estate and investment management company. It engages in buying, building, managing, and investing in properties worldwide. Jones Lang LaSalle Incorporated (NYSE:JLL) offers a range of real estate services, including leasing, property management, advisory, and capital market services. It is one of the best plays in real estate investing for beginners.
On February 7, Jones Lang LaSalle Incorporated (NYSE:JLL) reported a Q4 non-GAAP EPS of $4.23 and a revenue of $5.9 billion, outperforming Wall Street estimates by $0.50 and $110 million, respectively.
According to Insider Monkey’s fourth quarter database, 25 hedge funds held stakes in Jones Lang LaSalle Incorporated (NYSE:JLL), compared to 24 funds in the prior quarter. David Blood and Al Gore’s Generation Investment Management is the biggest stakeholder of the company, with 4.20 million shares worth $794 million.
Baron Real Estate Fund stated the following regarding Jones Lang LaSalle Incorporated (NYSE:JLL) 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. and Jones Lang LaSalle Incorporated (NYSE:JLL).
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.”
8. Compass, Inc. (NYSE:COMP)
Number of Hedge Fund Holders: 26
Compass, Inc. (NYSE:COMP) is an American real estate brokerage services provider. The company operates a cloud-based platform with integrated software for real estate functions, including customer relationship management, marketing, client service, and operations. It is one of the best real estate investing ideas for beginners.
On February 27, Compass, Inc. (NYSE:COMP) reported a Q4 GAAP EPS of -$0.17, beating market consensus by $0.02. The revenue of $1.10 billion, however, fell short of Wall Street estimates by $30 million. The company expects to be free cash flow positive for the full year 2024.
According to Insider Monkey’s fourth quarter database, Compass, Inc. (NYSE:COMP) was part of 26 hedge fund portfolios, compared to 19 in the last quarter. Richard Mashaal’s Rima Senvest Management is the largest stakeholder of the company, with 8.78 million shares worth $33 million.
Here is what Artisan Small Cap Fund has to say about Compass, Inc. (NYSE:COMP) in its Q3 2021 investor letter:
“We added several new GardenSM positions in Q3 including Compass. Compass is a real estate brokerage firm which provides its agents with a proprietary, end-to-end cloud-based platform. The company helps address the needs of buying and selling homes from client prospecting to closing, which includes customer relationship management, AI-driven prospecting, marketing (digital, social, email, video, print, signage, lead generation), market analysis and collaboration tools. The platform also uses machine learning, artificial intelligence and other advanced data analytics strategies to draw insights across the platform, allowing agents to be more efficient and informed in their selling efforts. We believe this technology advantage is key to the company continuing to disrupt and capture real estate commission market share. We have been impressed with the company’s ability to capture 4% market share since it was founded in 2012 (vs. Redfin, founded in 2002, holding a 1% market share). The company’s profit cycle can also be boosted by adding on additional services such as title insurance referral and escrow services, real estate marketing, home renovation referrals, home insurance and home warranty referrals—all of which we believe have a significantly larger addressable market than commissions (~7X).”
7. Redfin Corporation (NASDAQ:RDFN)
Number of Hedge Fund Holders: 26
Redfin Corporation (NASDAQ:RDFN) ranks 7th on our list of the best real estate stocks for beginners. It is a residential real estate brokerage company operating in the United States and Canada. The company functions through an online real estate marketplace, offering services to assist individuals in buying or selling homes. Redfin Corporation (NASDAQ:RDFN)’s total revenue for Q1 2024 is estimated to be in the range of $214 million to $223 million. Real estate services revenue is expected to be between $126 million and $131 million, rentals revenue between $49 million and $50 million, mortgage revenue between $29 million and $32 million, and other revenue between $9 million and $10 million.
According to Insider Monkey’s fourth quarter database, 26 hedge funds were long Redfin Corporation (NASDAQ:RDFN), compared to 21 funds in the prior quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP is the largest stakeholder of the company, with 3.3 million shares worth $34 million.
Saga Partners made the following comment about Redfin Corporation (NASDAQ:RDFN) in its Q4 2022 investor letter:
“Redfin Corporation (NASDAQ:RDFN)’s results have been disappointing in 2022. Aside from the COVID lockdown quarter of Q2’20, Redfin never experienced a year-over-year decline in transaction volume. In fact, the company has never grown transaction volume less than double digits.
The housing market has been difficult to navigate since COVID. Recent volatility in existing home sales is not what one would expect from normal cyclicality but has been due to the imbalances in supply/demand since COVID, combined with higher interest rates. Housing is unique in that most home buyers are also home sellers. Since rates moved up significantly in 2022, homeowners that refinanced at lower rates are less willing to buy a new home, at least at current prices, which has led to standstill in existing home transactions…” (Click here to read the full text)
6. Howard Hughes Holdings Inc. (NYSE:HHH)
Number of Hedge Fund Holders: 27
Howard Hughes Holdings Inc. (NYSE:HHH) owns, manages, and develops commercial, residential, and mixed-use properties in the United States. The company operates through four segments – Operating Assets, Master Planned Communities (MPCs), Seaport, and Strategic Developments. On February 27, Howard Hughes Holdings Inc. (NYSE:HHH) reported a Q4 GAAP EPS of $0.69 and a revenue of $335.8 million, outperforming Wall Street estimates by $0.65 and $31.8 million, respectively.
According to Insider Monkey’s fourth quarter database, 27 hedge funds held stakes in Howard Hughes Holdings Inc. (NYSE:HHH), compared to 20 funds in the earlier quarter.
In addition to Zillow Group, Inc. (NASDAQ:Z), CBRE Group, Inc. (NYSE:CBRE), and CoStar Group, Inc. (NASDAQ:CSGP), Howard Hughes Holdings Inc. (NYSE:HHH) is one of the best stocks when it comes to real estate investing for beginners. It ranks 6th on our list.
Pershing Square Holdings made the following comment about Howard Hughes Holdings Inc. (NYSE:HHH) in its first half 2023 investor letter:
“Howard Hughes Holdings Inc. (NYSE:HHH)’s high-quality collection of well-located master planned communities (“MPC”) delivered resilient performance in the first half of 2023 led by a strong recovery in the housing market and robust leasing momentum in the company’s income producing operating assets.
Mortgage interest rates have stabilized this year after rapidly rising in 2022. The supply of home resale inventory remains constrained as homeowners are reluctant to sell their existing homes and incur more expensive mortgages. As a result, there has been a resurgence in demand for newly built homes. Amidst that backdrop, the relative affordability of HHH’s MPCs, which are located in low cost-of-living and low-tax states like Texas and Nevada, remains highly appealing to prospective homebuyers. New home sales in HHH’s MPCs increased 11% year-over-year in the first half of 2023, reflecting strong demand for future land sales and causing the company to raise its guidance for full-year 2023 MPC land sale profits by 20%.
In HHH’s income-producing operating assets, net operating income (“NOI”) grew 6% on a same-store basis during the first half of the year driven by improving leasing velocity and strong rental rate growth. The company’s office portfolio is benefiting from a “flight to quality” as companies and their employees are drawn to the desirability of HHH’s walkable and amenity-rich MPCs. Likewise, in the company’s condominium development at Ward Village, Hawaii, HHH continues to experience durable sales momentum with its latest condo tower already 83% pre-sold within nine months of its launch. In the most recent quarter, the company contracted to sell 43 units, representing an impressive 27% of available unit inventory. At its Seaport development in New York City, the company is focused on driving operational improvements at the recently opened Tin Building food hall, which continues to generate operating losses in its first full year of operations.…” (Click here to read the full text)
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Disclosure: None. Real Estate Investing For Beginners: 11 Best Stocks To Buy is originally published on Insider Monkey.
