Investors that are looking for exposure to the real estate sector through the share market, may want to check out the ASX shares in this article.
That's because they have been tipped as top buys in FY 2025 by analysts at Bell Potter.
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What is the broker saying about ASX real estate shares?
Bell Potter believes that there is "significant value" in the real estate investment trust (REIT) sector right now. It explains:
After bond rates fell materially in November 2023, into EOY CY23, the REIT sector has since recalibrated with negative newsflow (valuation, cap trans wise). While this might be seen as a false start, we do think the REITs sector is presenting significant value from a historic valuation metric perspective with material discounts to NTA (c.20% discount for passive REITs), high dividend yields (6.1% sector WAV) and undemanding PE ratios (14.3x sector WAV).
With that in mind, let's take a look at three ASX real estate shares that have been named as buys by Bell Potter.
Dexus Convenience Retail REIT (ASX: DXC)
Bell Potter likes the Dexus Convenience Retail REIT. It is a convenience retail/service station REIT with a network of over 100 assets across the country. These are predominantly leased to institutional and strong covenant tenants including Chevron, Viva Energy (ASX: VEA), EG, Mobil and 7-Eleven.
The broker currently has a buy rating and $3.00 price target on its shares. It said:
DXC trades at a circa 34% discount to stated NTA which we think is overly punitive for a sub-sector where there is clear price discovery.
Bell Potter is expecting dividend yields of approximately 7.5% in FY 2024 and FY 2025.
GDI Property Group Ltd (ASX: GDI)
The broker is also a fan of this property company. It has a buy rating and 75 cents price target on its shares. It commented:
We think GDI requires patience, but ultimately see strong value trading at a -49% discount to NTA, with a 'free' operating business on the side.
Its analysts are expecting huge dividend yield of 8.8% each year through to FY 2026.
Healthco Healthcare and Wellness REIT (ASX: HCW)
This healthcare and wellness focused property company is a buy according to Bell Potter. It has a $1.50 price target on its shares. It said:
Healthcare real estate is highly fragmented and has a long runway domestically in Australia.
Bell Potter expects this to underpin dividend yields of 7.4% in FY 2024 and 7.7% in FY 2025.
