S&P/ASX 200 Index (ASX: XJO) shares in the real estate space are not the most exciting stocks for investors today. When interest rates are going up, investing in property shares sounds dumb. Right?
Let's check out the numbers.
Over 2022 so far, the S&P/ASX 200 A-REIT Index (ASX: XPJ) is down 26%. That's pretty close to the dismal performance of the S&P/ASX 200 Information Technology Index (ASX: XIJ), down 33%.
Yet we don't hear about real estate shares nearly as much as technology shares. They just ain't sexy.
Real estate shares are also down further than S&P/ASX 200 Consumer Discretionary (ASX: XDJ) shares, which have dominated headlines as experts tout cratering consumer confidence ahead due to inflation.
Consumer discretionary shares are down 20.8%, meaning they're performing 5% better than property shares. Hmm.
Real estate options in the ASX 200
There are 76 real estate ASX shares on the market. Most of them are real estate investment trusts (REITs) representing a wide variety of areas in the property sector.
For example, there's Mirvac Group (ASX: MGR), which is a major housing developer, and Scentre Group (ASX: SCG), the largest owner of premium Australian and New Zealand shopping malls. There are also property management and investment companies like Charter Hall Group (ASX: CHC).
Do you regret not buying that house?
If you did a straw poll among 50-plus-year-old Australians, odds are most of them will have a story lamenting a property they didn't buy and what it's worth today.
It's a pretty common 'kick thyself' theme. They look back and wonder why on Earth they didn't buy when prices were soft or falling.
Could we have a similar situation staring us in the face with ASX 200 real estate shares today?
Experts say buy this ASX 200 property share
The experts seem to think so, and one ASX 200 share they seem to be backing with conviction is Goodman Group (ASX: GMG).
According to data published on the Westpac trading platform, nine out of 14 analysts have a strong buy rating on Goodman shares today. Four say hold and one recommends a 'moderate' sell.
Presumably, a factor in their decision-making is the 36% decline in the Goodman share price in 2022.
What this has done is reduce the price-to-earnings (P/E) ratio to 12, which is well below the market and real estate sector averages of 14-plus.
As my colleague James reported yesterday, top broker Goldman Sachs is bullish, saying:
GMG continues to demonstrate its strong platform and positioning as evident in [the FY22] result, supported by our expectation of a strong outlook for the Industrial sector more broadly, with a number of favourable fundamentals underpinning future long-term demand for industrial space.
Goldman has a buy rating and a 12-month price target of $25.40 on this ASX 200 property share. That's a 49.85% potential upside in just one year, by the way. Kinda sexy.
Who is Goodman Group?
Goodman Group is the largest REIT in Australia. Among property shares, it's certainly a blue chip.
It's also one of the largest shares on the ASX 200 with a market capitalisation of $31.14 billion.
Goodman is an integrated global property group that specialises in industrial property. Warehouses, factories, distribution centres, business and office parks — that sort of thing.
It has four divisions — property investment, fund management, property services, and property development. It operates in 14 countries across the Asia Pacific, Europe, the United Kingdom and the Americas.
According to founder and CEO Greg Goodman, they have $73 billion worth of real estate assets under management and $13.6 billion of developments in the pipeline.
The company manages 410 properties in total. It had an operating profit of $1.5 billion in 2022, according to its annual report.
Goodman shares closed the session on Wednesday at $16.95, up 2.36% for the day.
It has a 52-week high of $26.96 and a 52-week low of $15.57.
