Historically low mortgage rates and the remote working culture fueled real estate demand last year. And with the hybrid work model still picking up pace, the real estate services industry is expected to continue to witness robust demand. So, we think it could be wise to bet on quality real estate services stocks Jones Lang LaSalle (JLL), Colliers International (CIGI), and Cushman & Wakefield (CWK). Read on.
The demand for real estate services soared in 2021 amid record-low mortgage rates and the remote working culture. The U.S. housing market’s existing-home sales hit their highest level in approximately 15 years. According to a NAR report, existing home sales totaled 6.12 million, representing an 8.5% increase year-over-year, reaching its highest level since 2006.
Despite increasing mortgage rates, the rise in employment and moderate house price growth are expected to boost real estate services sector demand. The Infrastructure Investment and Jobs Act is expected to provide further impetus to the real estate services industry. According to a SpendEdge report, the real estate agents and brokerage services market is expected to grow at a 4.8% CAGR by 2024.
Therefore, we think investors looking to benefit from the rising demand for real estate services could scoop up shares of quality stocks in this space Jones Lang LaSalle Incorporated (JLL), Colliers International Group Inc. (CIGI), and Cushman & Wakefield plc (CWK).
Jones Lang LaSalle Incorporated (JLL)
JLL in Chicago, is a professional services company that specializes in real estate and investment management. The company provides real estate services that include leasing, capital markets, integrated property and facility management, project management, advisory, consulting, valuations, and digital solutions. It operates through the Americas; Europe, Middle East and Africa (EMEA); and Asia Pacific business segments.
Last month, JLL completed its acquisition of Gilliland Construction Management, a leader in project and construction management services for life sciences, lab, retail, hospitality, industrial, multifamily, and office properties. The acquisition is to help JLL meet the demand it faces for growing construction, development, and redevelopment activity in San Diego and Southern California.
JLL’s revenue increased 22.7% year-over-year to $5.94 billion for the fourth quarter, ended Dec. 31, 2021. The company’s adjusted net income increased 62.1% year-over-year to $447 million. Also, its adjusted EPS came in at $8.66, representing a 63.7% increase year-over-year. In addition, its adjusted EBITDA increased 49.1% year-over-year to $622 million.
Analysts expect JLL’s EPS for its fiscal 2023 to increase 7.6% year-over-year to $21. Its revenue for the quarter ending June 30, 2022, is expected to increase 30.5% year-over-year to $1.95 billion. Also, it surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 24.1% to close the last trading session at $223.68.
JLL’s POWR Ratings reflect its solid prospects. According to our proprietary rating system, it has an overall rating of A, which translates to a Strong Buy. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Colliers International Group Inc. (CIGI)
CIGI is a diversified professional service and investment management company. The Toronto, Canada, company provides commercial real estate-oriented professional services and investment management to corporate and institutional clients. Its segments include Americas; Europe, Middle East, and Africa (EMEA); Asia and Australasia (Asia Pacific); and Investment Management.
Last week CIGI announced that its Colliers Engineering & Design (CED) business unit had acquired the civil engineering, design, and survey firm KFW Engineers & Surveying. The acquisition should enhance CED’s existing scale and capabilities in Texas and the Southwest. President and CEO of CED, Kevin Haney, said, “Through KFW, we are perfectly positioned to capitalize on Texas’ population boom, and we are thrilled to welcome their team to the Colliers family.”
For its fiscal fourth quarter, ended Dec. 31, 2021, CIGI’s revenues increased 47.2% year-over-year to $1.34 billion. The company’s adjusted EBITDA increased 23.9% year-over-year to $192.01 million. Also, its adjusted EPS came in at $2.25, representing an increase of 25.6% year-over-year.
For the quarter ending March 31, 2022, CIGI’s EPS is expected to increase 16.3% year-over-year to $1.21. Its revenue for the quarter ending June 30, 2022, increased 36.8% year-over-year to $1.02 billion. It surpassed consensus EPS estimates in each of the trailing four quarters. And over the past year, the stock has gained 19.7% in price to close the last trading session at $123.10.
CIGI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
Cushman & Wakefield plc (CWK)
CWK in London is a commercial real estate service provider. The company’s business line includes property, facilities and project management, leasing, capital markets and valuation, and other services. The company operates through the Americas; Europe, the Middle East and Africa (EMEA); and Asia Pacific (APAC) segments.
After an 18-year alliance, CWK announced the acquisition of Grant Street Associates, Inc. on March 2, 2022. Mike McCurdy, Managing Principal of CWK’s greater Philadelphia and Baltimore regions, said, “By acquiring Grant Street Associates, we will have the opportunity to tap into new markets and continue taking market share across different industries and asset classes that have proven to thrive in Pittsburgh, including technology, healthcare, multifamily and industrial.”
CWK’s total revenue increased 26.8% year-over-year to $2.88 billion for the fourth quarter, ended Dec. 31, 2021. The company’s adjusted net income increased 123.2% year-over-year to $213.90 million. Also, its adjusted EBITDA increased 75.5% year-over-year to $347.70 million. In addition, its adjusted EPS came in at $0.94, representing an increase of 118.6% year-over-year.
Analysts expect CWK’s EPS for the quarter ending March 31, 2022, to increase 109.1% year-over-year to $0.23. Its revenue for its fiscal year 2022 is expected to increase 7.3% year-over-year to $7.39 billion. It surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 14.5% in price to close the last trading session at $20.
CWK’s POWR Ratings reflect solid prospects. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
It has an A grade for Growth and a B grade for Sentiment. Again, it is ranked #10 in the Real Estate Services industry. Click here to see the other ratings of CWK for Value, Momentum, Stability, and Quality.
JLL shares were trading at $228.37 per share on Wednesday morning, up $4.69 (+2.10%). Year-to-date, JLL has declined -15.21%, versus a -9.23% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.