In this piece, we will take a look at the 12 most profitable real estate stocks now. For more real estate stocks, head on over to 5 Most Profitable Real Estate Stocks Now.
The real estate sector is one of the most lucrative industries in the world. Its importance is underscored by the fact that some of the largest economies in the world are inextricably linked to real estate development. The biggest example of the sector’s importance is the 2008 financial crisis. This crisis, the after effects of which we are dealing with even today, shook the real estate industry badly . Spurred by a policy of low interest rates, homeowners borrowed extravagantly to own their properties, and banks then used these loans as an asset to sell their interest payments to investors. However, once the interest rates went up, the mortgage owners started to default – kicking a vicious cycle that forced the Federal Reserve to pump billions of dollars into the economy to prevent an all out collapse. How much did the Fed spend to prevent disaster? Well, its latest balance shows that while before the crisis its balance sheet had roughly $0.9 trillion of assets, these swelled to $2.2 trillion by the end of 2008. Effectively, the central bank had to more than double its assets to bail out big banks and the economy, and it is still struggling to contain it, as the coronavirus pandemic further exacerbated the problem and led to the balance sheet swelling to $8.96 trillion.
Another more recent example of the perhaps outsized role that real estate plays come from the world’s second largest economy, China. Spurred by the financial difficulties of China Evergrande Group (OTCMKTS:EGRNF), the crisis continues to threaten not only the Chinese market but also the global economy due to the interlinking of large asset managers such as BlackRock with the Chinese stock market. In order to stimulate real estate, and by extension the broader economy, the Chinese government allowed low interest rates and increased bank lending to real estate companies to build properties and increase home ownership in the country. These stimuli led to the home prices in Shanghai rising by a whopping 150% between 2003 and 2010 and paved the way for excessive borrowing for big construction companies who then used these loans to pay other debts and take out more loans. The spiral led to the government making new laws, called the Three Red Arrows, which limited real estate developers’ ability to raise new funds. Steeped in debt, Evergrande found it difficult to raise working capital and missed bond payments.
In terms of market value, the real estate sector is one of the most valuable in the world. According to research from Allied Market, the global real estate market was worth a whopping $28 trillion in 2021. From then until 2031, the firm believes that it will grow at a compounded annual growth rate (CAGR) of 5.3% to sit at an estimated $48 trillion by the end of the forecast period. Cementing the importance of China in the industry, Allied Market Research points out that Asia Pacific is the world’s largest real estate sector, and that it accounts for more than two fifths of the global market. However, in terms of growth, the research firm believes that Latin America, the Middle East, and Africa (LAMEA) market will be the strongest growing region, as it outpaces the broader industry by posting a CAGR of 6.4%.
Today we’ll look at some of the biggest money makers in the real estate world, with the top performers being Longfor Group Holdings Limited (HKG:0960.HK), China Overseas Land & Investment Limited (HKG:0688.HK), and Prologis, Inc. (NYSE:PLD).
We sifted out the biggest real estate companies in the world in terms of their market capitalization and revenue. Then, their net income for the past twelve months was determined, and the top twelve performers are listed.
CBRE Group, Inc. (NYSE:CBRE) is a real estate services company that provides services such as building engineering, construction management, investment services to commercial real estate investors, and property sales and mortgage services.
CBRE Group, Inc. (NYSE:CBRE) received a Buy share price rating and a $100 price target from Citi in January 2023 as the bank outlined that the firm is slated to benefit from real estate outsourcing. By the end of September 2022, 47 of the 920 hedge funds polled by Insider Monkey had invested in the firm.
CBRE Group, Inc. (NYSE:CBRE)’s largest investor is Natixis Global Asset Management’s Harris Associates which owns 13.6 million shares that are worth $1 billion.
Along with Prologis, Inc. (NYSE:PLD), Longfor Group Holdings Limited (HKG:0960.HK), and China Overseas Land & Investment Limited (HKG:0688.HK), CBRE Group, Inc. (NYSE:CBRE) is a profitable real estate stock.
Public Storage (NYSE:PSA) is an American company that is headquartered in Glendale, California. The firm is a real estate investment trust (REIT) that buys, builds, and operates storage units. It has thousands of facilities all over the U.S., alongside interests in a European storage company that also provides it with a global footprint.
Public Storage (NYSE:PSA) faced a setback in February 2023 when another storage company rejected the firm’s massive $11 billion buyout offer, sharing that it believes the offer is paying too little. 34 of the 920 hedge funds polled by Insider Monkey in Q3 2022 had held a stake in the company. The trailing twelve month net income removes the effect of a security sale on the firm’s profit.
Public Storage (NYSE:PSA)’s largest investor in our database is Jeffrey Furber’s AEW Capital Management which owns 457,800 shares that are worth $128 million.
Simon Property Group, Inc. (NYSE:SPG) focuses on developing and operating hospitality properties such as restaurants and entertainment centers alongside also focusing on high end shopping malls. The firm is headquartered in Indianapolis, Indiana.
Simon Property Group, Inc. (NYSE:SPG) is the largest shopping mall operator in the United States, but despite this, the firm missed a rather large $295 million loan maturity in February 2023. By the end of last year’s third quarter, 35 of the 920 hedge funds surveyed by Insider Monkey had bought the firm’s shares.
Out of these, Israel Englander’s Millennium Management is Simon Property Group, Inc. (NYSE:SPG)’s largest investor. It owns 569,619 shares that are worth $66 million.
10. China Evergrande Group (OTCMKTS:EGRNF)
Trailing Twelve Month Net Income: $2.32 billion (1HKD = 0.13USD)
Number of Hedge Fund Holders in Q3 2022: N/A
China Evergrande Group (OTCMKTS:EGRNF) is a diversified Chinese property company that operates in the development, investment, management, and consumer sales segments. The firm also has finance, healthcare, and internet divisions.
China Evergrande Group (OTCMKTS:EGRNF) is busy investigating matters of financial impropriety, with an investigation revealing in February 2023 that its directors had acted improperly in redirecting loans from its property services division to the group as a whole.
9. Goodman Group (ASX:GMG.AX)
Trailing Twelve Month Net Income: $2.34 billion (1AUD = 0.69USD)
Number of Hedge Fund Holders in Q3 2022: N/A
Goodman Group (ASX:GMG.AX) is an Australian company headquartered in Rosebery, New South Wales. The firm has a global operational footprint, with a presence in lucrative markets such as the United Kingdom, Brazil, North America, Asia, and Europe.
Goodman Group (ASX:GMG.AX)’s first fiscal half of 2022 financial results shared in February 2023 revealed that the firm had raked in AUD1 billion in revenue, which marked a 1.5% drop. At the same time, its operating profit of AUD877 million marked an 11.5% annual increase.
American Tower Corporation (NYSE:AMT) is a specialty real estate company that focuses on operating telecommunications towers. The firm has hundreds of thousands of communications sites all over the world.
American Tower Corporation (NYSE:AMT) is busy expanding its global footprint, as a report in February 2023 speculated that the firm is interested in buying out a Spanish mobile tower operator. Insider Monkey dug through 920 hedge fund portfolios for last year’s third quarter to determine that 42 had held a stake in American Tower Corporation (NYSE:AMT).
American Tower Corporation (NYSE:AMT)’s largest investor is Charles Akre’s Akre Capital Management which owns 6.9 million shares that are worth $1.4 billion.
7. Vonovia SE (ETR:VNA.DE)
Trailing Twelve Month Net Income: $3 billion (1EUR = 1.07USD)
Number of Hedge Fund Holders in Q3 2022: N/A
Vonovia SE (ETR:VNA.DE) is a German real estate company that focuses its attention on the residential sector. The firm has more than half a million residential units in its portfolio that are spread across several European countries such as Germany and Sweden.
Vonovia SE (ETR:VNA.DE) is interested in the sustainable real estate development industry, as it is leading a 100 million funding round for an Austrian sustainable homes developer.
Vonovia SE (ETR:VNA.DE) joins our list of profitable real estate stocks, alongside others such as Longfor Group Holdings Limited (HKG:0960.HK), China Overseas Land & Investment Limited (HKG:0688.HK), and Prologis, Inc. (NYSE:PLD).
5. CK Asset Holdings Limited (HKG:1113.HK)
Trailing Twelve Month Net Income: $3.01 billion (1HKD = 0.13USD)
Number of Hedge Fund Holders in Q3 2022: N/A
CK Asset Holdings Limited (HKG:1113.HK) is an Asian property developer with a global footprint. It is headquartered in Central Hong Kong and primarily concerns itself with operating hospitality locations, developing residential properties, and leasing commercial properties such as offices and warehouses. CK Asset Holdings Limited (HKG:1113.HK) has operations in the U.S., China, Hong Kong, the U.K., Singapore, and several other countries.
CK Asset Holdings Limited (HKG:1113.HK) scored a big win in the Hong Kong property scene in February 2023 when it was able to buy 1.42 million square feet of land for a bargain price of $1.1 billion. The purchase came as property prices were dropping, and CK Asset Holdings Limited (HKG:1113.HK) is also required to build a nursing home and a childcare facility as part of the deal.
4. Sun Hung Kai Properties Limited (HKG:0016.HK)
Trailing Twelve Month Net Income: $3.25 billion (1HKD = 0.13USD)
Number of Hedge Fund Holders in Q3 2022: N/A
Sun Hung Kai Properties Limited (HKG:0016.HK) is a Chinese real estate company that develops and sells a wide variety of properties such as shopping malls, residential properties, office spaces, hotels, and more. It has more than a hundred million square feet of property in Mainland China and Hong Kong and is headquartered in Wan Chai, Hong Kong.
Sun Hung Kai Properties Limited (HKG:0016.HK) is one of the leading Hong Kong property developers when it comes to selling eco friendly properties – a feature that has let it generate over a billion dollars in revenue in Mai Po wetlands.
Prologis, Inc. (NYSE:PLD) is an American real estate company that is based in San Francisco, California. The firm has almost a billion square feet of ventures, properties, and projects in more than a dozen countries.
One crucial market that Prologis, Inc. (NYSE:PLD) operates in is Japan, where its properties help with disaster relief operations. The firm expanded this recently by signing agreements with 11 cities for disaster relief. Insider Monkey’s Q3 2022 survey of 920 hedge funds revealed that 59 had held a stake in the company.
Prologis, Inc. (NYSE:PLD)’s largest investor is Jeffrey Furber’s AEW Capital Management which owns 2.8 million shares that are worth $316 million.
2. Longfor Group Holdings Limited (HKG:0960.HK)
Trailing Twelve Month Net Income: $3.49 billion (1HKD = 0.13USD)
Number of Hedge Fund Holders in Q3 2022: N/A
Longfor Group Holdings Limited (HKG:0960.HK) is a diversified Chinese investment holding company that has several real estate divisions that develop, invest in, and manage properties. The firm concerns itself with developing and selling residential, corporate, and commercial properties.
Longfor Group Holdings Limited (HKG:0960.HK) is a rare Chinese property developer that has received funding from government banks to pay off foreign debts. The firm received a $100 million loan for this purpose by keeping its Chinese properties as collateral in December 2022.
1. China Overseas Land & Investment Limited (HKG:0688.HK)
Trailing Twelve Month Net Income: $5.26 billion (1HKD = 0.13USD)
Number of Hedge Fund Holders in Q3 2022: N/A
China Overseas Land & Investment Limited (HKG:0688.HK) is a holding company with real estate interests in China and the U.K. The firm builds and rents residential and commercial properties, alongside providing design consultancy services. It is headquartered in Central Hong Kong.
China Overseas Land & Investment Limited (HKG:0688.HK) won a major reprieve in February 2023 when Fitch reiterated the company’s debt rating to A- at a time when the Chinese real estate segment is suffering from a crisis of confidence.
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Both of the main candidates in British Columbia‘s election campaign pushed their own plans to solve parts of the housing crisis.
B.C. Conservative Leader John Rustad told a news conference in Surrey that his government would end the multi-year permit delays and would get homes built at the speed and scale needed to address the housing crisis.
NDP Leader David Eby went to Cumberland on Vancouver Island to promote his party’s plan to fast-track factory-built homes.
Eby said pre-built homes would cut waste, reduce emissions, and advances in the industry mean the homes are “beautiful and high-quality.”
He said the process was “more like Lego” than normal construction.
“The idea is pretty straightforward. In a controlled factory environment, you can build faster, you can build with less waste and the homes that are built are more consistent and more efficient and it’s cheaper.”
Rustad said the Conservative Party of B.C. would redesign the approval process for home building, setting a six-month limit for rezoning and development permit and three months for a building permit.
“This means that we will significantly be able to improve the time frame it takes to actually get construction happening in this province, and we’ll be working with city halls across the province to be able to meet these timelines,” Rustad said.
If a clear yes or no isn’t issued by a city within that limit, the province would issue the permit, said a B.C. Conservative news release announcing the platform.
Rustad said the party would remove NDP taxes on housing, support transit-oriented communities, reform development cost charges and make taxes fair for homeowners.
“We have so much regulation that has been put in place associated with housing that it makes it really difficult for anybody to be able to actually get through and build things, not to mention the cost,” he said. “So we’ll amend the Local Government Act to prevent any home killing red tape that has been introduced by this government.”
The party’s statement also outlined their zoning plan, adding that it would work with BC Assessment “to make sure that current homeowners don’t get hit with higher tax bills based on future potential.”
The party statement said, if elected, a Conservative government would build new towns, saying B.C. is blessed with an abundance of land, but the NDP refuses to use it to end the housing shortage.
“We will identify land outside the Agricultural Land Reserve that has the potential to support beautiful new communities.”
A statement issued by the NDP on Friday said it would work with industry, municipalities and First Nations to create a provincewide framework for prefabricated homes so builders know what’s required in every community.
It said there would be a pre-approved set of designs to reduce the permitting process, and it would work to develop skills training needed to support prefabricated home construction.
The statement said Scandinavian countries had embraced factory-built homes, which “offer an alternative to the much slower, more costly process of building on-site.”
“By growing B.C.’s own factory-built home construction industry, everyone from multi-generational families to municipalities will be able to quickly build single homes, duplexes and triplexes on land they already own,” Eby said.
The party said legislation passed by the NDP government last year was a “game changer” for the factory-built home construction industry in the province, where there are currently 10 certified manufacturing plants.
Muchalat Construction Ltd. is one of them, and owner Tania Formosa said pre-approved structures speed up the building process considerably.
She said her company’s projects currently take 12 to 13 months to complete, from startup design to getting the house on site.
“If everything was in place and fast-tracked at the beginning and we were able to just fly along, it would probably take three months off the full schedule,” she said.
She said a main issue for modular manufacturers is that work gets stalled if they run into roadblocks with jurisdictions or BC Housing in the approval process.
“There’s no option for the manufacturer to start another project,” she said. “Having our products approved prior to the process would be amazing.”
She acknowledged the potential drawback of pre-approved designs creating a cookie-cutter look for some neighbourhoods.
“Unfortunately (what) happens in your jurisdiction, in your city, is it ends up looking a lot the same, but what are your priorities?”
This report by The Canadian Press was first published Sept. 27, 2024.
The Canada Mortgage and Housing Corp. says construction of new homes in Canada’s six largest cities rose four per cent year-over-year during the first half of 2024, but housing starts were still not enough to meet growing demand.
The agency says growth in housing starts was driven by significant gains in Calgary, Edmonton and Montreal.
A total of 68,639 units began construction, the second strongest figure since 1990, however the rate of housing starts per capita meant activity was around the historical average and not enough “to reduce the existing supply gap and improve affordability for Canadians.”
The report says new home construction trends varied significantly across the markets studied, as Toronto, Vancouver and Ottawa saw declines ranging from 10 to 20 per cent from the same period last year.
Apartment starts in the six regions increased slightly, driven by construction of new units for rent, as nearly half of the apartments started in the first half of 2024 were purpose-built rentals.
But condominium apartment starts fell in the first six months of the year in most cities, a trend which the agency predicts will continue amid soft demand as developers struggle to reach minimum pre-construction sales required.
This report by The Canadian Press was first published Sept. 26, 2024.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
