You don't just have to buy houses to invest in real estate.
You can also do it by buying ASX real estate shares or real estate investment trusts (REITs).
The good news is that the Australian share market is home to a number of quality options that give investors access to all corners of the property market.
But which ASX real estate shares could be top options? Listed below are two that analysts rate among their best ideas. They are as follows:
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Cedar Woods Properties Limited (ASX: CWP)
Morgans currently has Cedar Woods Properties on its best ideas list. It is a leading, national developer of residential communities and commercial developments.
The broker believes the ASX real estate share is well-positioned in the current environment due to its lower priced stock. It explains:
CWP is a volume business and the demand for lots looks to be improving, with margins to invariably follow. CWP's exposure to lower priced stock in higher growth markets sees further potential to drive earnings. On this basis, we see every reason for CWP to trade at NTA and potentially at a premium, were the housing cycle to gain steam through FY25/26.
Morgans currently has an add rating and $5.60 price target on its shares. Based on its current share price of $4.36, this implies potential upside of 28% for investors from current levels.
Another positive is that the broker expects Cedar Woods Properties to provide investors with attractive dividend yields in the near term. It is forecasting dividends per share of 18 cents in FY 2024 and 20 cents in FY 2025. This equates to yields of 4.1% and 4.6%, respectively.
Healthco Healthcare and Wellness REIT (ASX: HCW)
Another ASX real estate share that could be a top option for investors is the Healthco Healthcare and Wellness REIT.
It is Australia's largest diversified healthcare REIT with a portfolio including investments in hospitals, aged care, childcare, government, life sciences, and primary care and wellness property assets.
Bell Potter is very positive on the company's long term outlook and feels its shares are too cheap at present. It said:
HCW has underperformed the REIT sector last 3 months following bond yield reversion and is attractively priced at 20% discount to NTA (but only REIT to record flat to positive valuation movement at 1H24) with double digit 3 year EPS CAGR given high relative sector debt hedging and ability to grow its $1bn development pipeline via attractive YoC spread to marginal cost of debt. Longer term, HCW has significant scope for growth with an estimated $218 billion addressable market where an ageing and growing population should underpin long-term sector demand.
Bell Potter has a buy rating and $1.50 price target on its shares. Based on its current share price of $1.14, this implies potential upside of 31% for investors. In addition, it is forecasting dividend yields of 7% in FY 2024 and 7.3% in FY 2025.
