After the initial uncertainty about an early interest rate cut, some real estate stocks seem to be stabilising. Having strong long term growth potential, these may be offering an opportunity to include these stocks in portfolio.
REA Group Ltd (ASX: REA)
REA Group Ltd (ASX: REA) delivered robust results for Q1 FY25, with revenue rising 21% YoY to $413m and EBITDA (excluding associates) increasing 23% to $243m. Core Australian revenue surged 20%, driven by double-digit yield growth and a 7% increase in new residential listings. Sydney and Melbourne led the way with listing growth of 11% and 9%, respectively. Excluding the impact of the Realtair acquisition, consolidated from 1 July, Australian revenue increased 19%. The Residential business outperformed, with revenue up 23% YoY. Strong Buy revenue growth was underpinned by a 15% yield increase, reflecting higher Premiere+ pricing, deeper penetration, and add-on adoption. Rent revenue also rose on an 8% price hike and increased listings. Commercial revenue benefited from a 12% price rise and higher depth penetration, while Developer revenue grew modestly despite an 11% decline in project commencements.
REA’s audience metrics continue to strengthen, with realestate.com.au solidifying its leadership as Australia’s #1 property platform. Monthly visits averaged 132.4m, 4x its nearest competitor, and seller leads jumped 80% YoY. Internationally, REA India saw revenue climb 42%, supported by growth in adjacency services and strong performance at Housing.com, though PropTiger revenue softened due to stock volume pressures. Operating expenses rose 19% YoY, reflecting the impact of the Realtair acquisition, marketing investments, and strategic employee growth.
The company reclassified its 17.2% PropertyGuru stake as an asset for sale, with divestment expected to complete in FY25. REA also expanded its strategic partnership with Athena Home Loans, acquiring a 19.9% stake for $60m. The Australian property market remains robust, driven by strong employment, population growth, and stable interest rates. Residential Buy yield growth is projected to remain in double digits for FY25, though geographical mix may present modest headwinds. Management reiterated its positive outlook, supported by record listing activity and a strengthened product suite, positioning REA for continued growth.
Mirvac Group (ASX: MGR)
Mirvac Group (ASX: MGR) reported a strong start to FY25, highlighting significant progress across asset sales, leasing, and development activities. Key achievements include the execution of over $0.5bn in asset sales, notably the exchange of 75 George Street, Parramatta (~$50m, 6.4% premium to book value), and ongoing due diligence for the sale of 10-20 Bond Street, Sydney. Leasing momentum remained robust, with ~38,000sqm under heads of agreement, including a key renewal for EY at 200 George Street (~26,000sqm over 10 years), effectively de-risking FY26 expiries. Office occupancy remains high at 95.1%, while industrial occupancy of 96.2% reflects active asset management, including leasing opportunities at 36 Gow Street, Padstow.
The living and logistics sectors contributed new income streams. Mirvac reached practical completion of LIV Aston, Melbourne (474 lots, ~28% leased post-completion), and Aspect Industrial Estate’s second warehouse (100% leased), with the third warehouse nearing completion. Residential sales activity saw a 33% YoY increase, with 346 lot exchanges and pre-sales rising to ~$1.4bn. Master planned communities in Brisbane and Perth drove growth, supported by strengthening buyer leads and the Victorian government’s stamp duty relief measures. In the retail portfolio, occupancy remains high at 98.2%, with specialty sales productivity of $11,284/sqm and annual turnover growth of +2.5%.
Funds management initiatives delivered progress, including development completions within the Build-to-Rent Venture and increased leasing within the Mirvac Wholesale Office Fund (occupancy: 92%). Development highlights include advancing Harbourside, Sydney (residential launch imminent; ~18% commercial pre-leased) and progressing construction at key projects such as 55 Pitt Street, Sydney (~34% pre-leased). Mirvac reaffirmed FY25 guidance for operating EPS of 12.0–12.3c and DPS of 9.0c, contingent on achieving 2,000–2,500 lot settlements, >$0.5bn in asset sales, and securing capital partnerships. With a clear strategy and multiple growth levers, Mirvac remains well-positioned to deliver sustainable value and capitalize on opportunities across its diversified portfolio.
Source: Company’s Report
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