Top Undervalued Real Estate Stocks To Buy Now

Performance in the real estate sector generally tracks the economic cycle. During periods of high growth and inflation, real estate investments usually post strong returns. However, during an economic bust, these investments tend to underperform. Mirvac Group and Vicinity Centres are real estate stocks on my list that are potentially undervalued, which means their current share prices are trading well-below what the companies are actually worth. Investors can determine how much a cyclical company is worth based on how much money they are expected to make in the future, or compared to the value of their peers. The list I’ve put together below are of stocks that compare favourably on all criteria, which potentially makes them good investments if you believe the price should eventually reflect the stock’s actual value.

Mirvac Group (ASX:MGR)

Mirvac is a leading, diversified Australian property group, with an integrated development and asset management capability. Established in 1972, and headed by CEO Susan Lloyd-Hurwitz, the company employs 1,470 people and with the stock’s market cap sitting at AUD A$7.98B, it comes under the mid-cap group.

MGR’s shares are now floating at around -29% below its actual level of $3.01, at a price tag of AU$2.15, based on my discounted cash flow model. This mismatch indicates a chance to invest in MGR at a discounted price. What’s even more appeal is that MGR’s PE ratio is trading at around 7.11x relative to its REITs peer level of, 8.31x suggesting that relative to its comparable set of companies, you can purchase MGR’s stock for a lower price right now. MGR is also a financially healthy company, with current assets covering liabilities in the near term and over the long run.

Continue research on Mirvac Group here.

ASX:MGR PE PEG Gauge Apr 1st 18
ASX:MGR PE PEG Gauge Apr 1st 18

Vicinity Centres (ASX:VCX)

Vicinity Centres (Vicinity or the Group) is one of Australia’s leading retail property groups with a fully integrated asset management platform, and over $26 billion in retail assets under management across 81 shopping centres, making it the second largest listed manager of Australian retail property. The company now has 800 employees and has a market cap of AUD A$9.33B, putting it in the mid-cap category.

VCX’s shares are currently hovering at around -35% beneath its true level of $3.69, at the market price of AU$2.41, according to my discounted cash flow model. The difference between value and price signals a potential opportunity to buy VCX shares at a discount. In addition to this, VCX’s PE ratio is trading at around 6.63x against its its REITs peer level of, 8.31x suggesting that relative to other stocks in the industry, we can buy VCX’s stock at a cheaper price today. VCX is also in good financial health, as near-term assets sufficiently cover liabilities in the near future as well as in the long run.

Interested in Vicinity Centres? Find out more here.

ASX:VCX PE PEG Gauge Apr 1st 18
ASX:VCX PE PEG Gauge Apr 1st 18

Stockland (ASX:SGP)

Stockland (ASX: SGP) was founded in 1952 and has grown to become Australia’s largest diversified property group – owning, developing and managing a large portfolio of shopping centres, residential communities, retirement living villages, office and industrial assets. Started in 1952, and currently lead by Mark Steinert, the company employs 1,440 people and with the stock’s market cap sitting at AUD A$9.78B, it comes under the mid-cap stocks category.

SGP’s shares are now hovering at around -28% less than its intrinsic level of $5.57, at the market price of AU$4.03, based on my discounted cash flow model. The difference between value and price signals a potential opportunity to buy SGP shares at a discount. In terms of relative valuation, SGP’s PE ratio is trading at 8.27x against its its REITs peer level of, 8.31x implying that relative to its comparable set of companies, we can invest in SGP at a lower price. SGP also has a healthy balance sheet, with current assets covering liabilities in the near term and over the long run.

More detail on Stockland here.

ASX:SGP PE PEG Gauge Apr 1st 18
ASX:SGP PE PEG Gauge Apr 1st 18

For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.

Related: Investment Tips From Ellevest CEO Sallie Krawcheck


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.