Which are the best real estate shares on NZX?

Summary 

  • After witnessing COVID-19 jolts, real estate stocks have gained investor interest as the economy recovered and opened.
  • The country is experiencing a relentless rise in house prices due to lesser interest rates and easy availability.
  • Here are 5 real estate stocks that have given positive results to date.

The real estate industry was hit hard by the lockdowns and limitations imposed to curb the spread of the COVID-19 pandemic. After an evident slump, the real estate market began to re-stabilize, and people began to consider commercial and private real estate investments.

ALSO READ: Deep dive into New Zealand Property Market

Investors were enticed back into the market by low-cost loans and loosened lending regulations to bolster the economy during the pandemic. However, these measures led NZ house prices to soar with astonishing recovery in the housing market.

Source: Copyright © 2021 Kalkine Media Pty Ltd.

As per REINZ, house prices in NZ have witnessed a rise of 28.7% over the year to June 2021 to $820,000.

 DO READ: Housing Crisis Deepens in New Zealand

Subsequently, real estate stocks have gained momentum. REITs in New Zealand primarily invest in commercial property in 3 sectors: offices (corporate and government offices), retail (shopping malls and retail stores), and industrial sector (warehouses and factories).

However, if an investor is looking for residential investment, retirement and other property investment companies can give better exposure than REITs.

Amid this backdrop, let's skim through these 5 real estate stocks on NZX that performed well to date as compared to last year.

CDL Investments New Zealand Limited (NZX:CDI)

CDL Investments' shares have witnessed an annual rise of 54.54% to $1.19 on 21 July 2021, up from $0.77 in the same month last year.

CDL Investments, a property investor, witnessed extraordinary sales levels, especially during and after lockdown in March 2020, and the impetus has carried through to 2021.

The Group has adequate land holdings and the finances to buy more property and finish all development activities scheduled for 2021.

Sales were reported across the Group's initiatives in Auckland, Hamilton, Hawkes Bay, and Christchurch, prompting us to build further phases at Prestons Park and Kewa Road, which the firm plans to sell at the end of 2021 and settle in 2022.

 

Goodman Property Trust (NZX:GMT)

Goodman Property's shares have witnessed an annual rise of 10.3% to $24.780 on 21 July 2021, up from $2.17 in the same month last year.

Goodman Property is the biggest property investor listed on NX and has a market cap of $3.34 billion. The Group has been extremely robust to the effects of COVID-19 in FY21 while implementing an investment plan centered on the Auckland’s urban logistics market.

ALSO READ: Are these six REIT stocks good investment option in 2021?

In FY21, GMT reported a gain of 128.2% in statutory profit before tax to $648.9 million for the year ended 31 March 2021, with a 23% rise in net tangible assets. It reported cash earnings of 6.4 cents per unit and cash distributions of 5.3 cents per unit for the period.

Shareholders received a Q4 cash distribution of $0.01325000 per unit for FY21 with an additional $0.00232906 per unit in imputation credits on 10 June 2021.

 

Argosy Property Limited (NZX:ARG)

Argosy Property's shares have witnessed an annual rise of 34.6% to $1.65 on 21 July 2021, up from $1.225 in the same month last year.

Argosy Property, a diverse property management trust with a market cap of $1.39 billion, stayed resilient amid COVID-19 and reported a net property income of $108 million with a rise of 13.7% in net distributable income for 12 months ended 31 March 2021.

ARG plans to become carbon neutral and targets to shift 50% of its portfolio to green assets in March end 2021.

The Group paid a dividend of 1.6125cps on 23 June 2021 for Q4 FY21. ARG expects the dividend for FY22 will be 6.55cps, up 1.6% on the previous year.

Also Read: What are dividends? How do dividends work in New Zealand?

 

Vital Healthcare Property Trust (NZX:VHP)

Vital Healthcare Property's shares have witnessed an annual rise of 24.5% to $3.2 on 21 July 2021, up from $2.57 in the same month last year. It has a market cap of $1.66 billion.

The Group outperformed during COVID-19 for 12 months ended 31 December 2020, showing its defensive portfolio. This led VHP to increase its distribution to 9cpu for the second half of FY21, up from 8.75cpu.

Vital's net property income increased by 11.7% for 3 months ended 31 March 2021 (Q3FY21) and by 9.6% for the financial year to date compared to the preceding comparable periods due to acquisitions, developments, and rental growth.

The Group's present committed developments remain on time and on budget and collected over 99% rent during Q3FY21.

Stride Property Ltd & Stride Investment Management Ltd (NZX:SPG)      

Stride Property's shares have witnessed an annual rise of 29.6% to $2.49 on 21 July 2021, up from $1.92 in the same month last year. It has a market cap of $1.17 billion.

The Group reported positive results for FY21, reporting profit after income tax of $132 million for FY21, compared to a negative $0.1 million for FY20. The Group's portfolio is valued at $1.1 billion as of 31 March 2021, up 4.2% since 31 March 2020.

Stride intends to pay a combined cash dividend for SPL and SIML of 9.91cps during FY22.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)

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