Geeta Gopinath, the Chief Economist for IMF, has downgraded the economy by 0.25% for this fiscal year but attributed such downgrading to India’s economic slowdown. It predicted the USA’s growth above 4%. With the Federal bank slowly getting ready to relax the rates, the entire US market may see an increased demand. City Momentum Index report forecasts a general upward trend in consumer demand for real estate. When we discuss the top real estate companies, we can only talk about quantifiable measures such as market cap and trade volume. The latter is also dependent on the amount of goodwill an individual firm has garnered. Besides, market cap is proportional to the annual sales which means measuring the capitalization value of any firm might be just as good a metric for quantifying the idea of “Top Real Estate Companies” as the top value
The global outlook for investments in the real estate sector has been positive, with North America emerging as the preferred destination. The favorable global investment climate, plateauing interest rates, and a technology-driven investment climate have born well for the real estate sector. The favorable global investment climate is useful because the intercompany agreements in real estate also play a vital role in allowing us to quantify the top real estate companies. Since the fiscal year 2019-20 hasn’t ended, we discuss the trends for the fiscal year 2018-19 and use the three completed quarters of 2019-20 as mere prediction reports before making qualifying statements. It is also worthwhile to look at the emerging and most promising companies. We look at these companies from the POV of funding raised. It is helpful to note that seed funding does not effectively preclude a company from joining this list.
Market performance across the globe has been cautiously positive as well. In the real estate sector, it is not just commercial real estate firms that have fared well. Real Estate Investment Trusts (REITs) have also performed remarkably well. REITs are vehicles that allow individuals to invest in a real estate firm’s portfolio. These REITs own, develop, or manage several income-generating properties. Forbes publishes a Global 2000 which tracks the best performing REITs in any year. For the fiscal year 2019-20, Forbes’ list included 6 American real estate companies with a global presence. It is important to note that Forbes has ranked only the publicly traded companies whose data on their global operations is available. These rankings have been decided based on their revenue, profit, assets, and market cap. Each of these metrics has been equally weighted, which precludes any bias that could creep up in favor of any one particular parameter.
This is probably as good a time as any to note that real estate companies don’t just deal in brokerage. They also involve in owning property, managing investors’ properties, or developing properties. While some companies own, yet others prefer to lease. However, owning, managing, and developing is not just restricted to conventional commercial spaces. For example, American Tower, a famous real estate company, with a market cap of 102.3 billion dollars, trades in communication towers. This loose definition of real estate is what helps us play around in defining the top real estate companies in 2020.
The purpose of this article is to make you question yourself the reason you are reading this. If it is just conventional brokerage services that you need, you would probably get better services from your local dealer. It is not unknown that the quality of the services of these companies is far superior.This article deals with a combination of REITs and commercial real estate and brokerage firms without attempting to differentiate for the purpose that the definition of a real estate company is loose. The firms mentioned under this include firms that have received funding also.
Simon Property Group is an American commercial real estate company with a gross leasable area of 241 million square feet in 325 properties in just North America and Asia. It is also the largest retail REIT with a market capitalization of 55 billion dollars. Simon Property Group is also the largest shopping mall operator in the US, with a global annual sales volume of 5.6 billion dollars and a profit of 2.5 billion dollars. It ranked #3 on Forbes’ list.
2. CBRE Group
CBRE Group is the world’s largest commercial real estate firm, with a revenue of 21.34 billion
dollars for the year ended 2018-19. For the end of that fiscal year, Forbes has ranked it 143 on its list of Fortune 500 companies. It has been on that list every year since 2008. CBRE Group Inc serves more than 90 of the top 100 companies on Forbes’ Fortune 500 companies list. For the fiscal year 2018-19, it had 90000 employees and had a market capitalization of 21.4 billion dollars. On NYSE, it had a 52-week high of 65 and a 52-week low of 45 dollars.
Cushman and Wakefield PLC is among the top commercial real estate companies in the world, operating more than 3.6 billion square feet of office space. For the year 2018, it had a revenue of 8.2 billion dollars and has a labor strength of 51000 employees. In 2015, DTZ and Cushman & Wakefield merged and continued operating under Cushman & Wakefield brand only. In spite of having such high margins, its market cap is only 4.3 billion dollars.
JLL is the world’s second-largest commercial real estate company in the world. It is ranked 189th on Forbes’ Fortune 500 companies list. In addition to the real estate business, it also provides property and asset management, facility management, capital markets, advisory and consulting services. For the year 2018-19, it had a revenue of 16 billion dollars and a net profit of 491 million dollars. Its liabilities are one reason its market cap is 9.2 billion dollars. As of 2019, it operates in 80 countries and an employee strength of 91000.
Newer companies started employing disruptive technology on a more micro-scale to cater to the residential real estate problem. While the presence of these companies is localized to their headquarters, they have received impressive valuations in their first and second rounds of valuation. Homie, founded in Utah, is one such company that raised 23 million dollars in series B funding.
Houwzer is another such company which has raised 9.5 million dollars in private financing. It had a radical business model that focussed on paying its employees in salaries rather than as a percentage of the total sale value made.
American Tower Company, or ATC as it is commonly called, is a real estate investment trust that deals in communication towers. It primarily leases spaces, builds communication towers, and then sells the place on top of the tower to tenants. It had an annual sale volume of 7 billion dollars and a market cap of 85 billion dollars. It ranked 410 on Forbes’ Fortune 500 companies list and 3rd on Forbes’ global 2000 list in the field of real estate
Short for Real Estate Maximus, RE/Max is a global commercial real estate company operating in more than 100 countries with 6800 offices and 100000 agents. Until 2013, it held the #1 position for market share in the US and Canada. It operates on a franchise model, and by the end of 2018-19, it had 3000 employees and 13 billion dollars in sales volume. With a profit of 265 million, it had a market valuation of 700 million dollars.
Equity Residential is the 3rd largest apartment owner in the United States and the 9th largest apartment manager in North America. It had interests in 307 properties, with a total of 79500 apartments by the end of the third quarter in 2018-19. It had profits of 2.56 billion dollars and a market capitalization of 27.71 billion dollars towards the end of 2018-19. It ranked 18th on Forbes’ Global 2000 list.
10. Vornado Realty
Vornado Realty Trust is a real estate investment trust company that primarily invests in office buildings and street retail in North America. As a REIT, it had an impressive performance with an average PE ratio trail of 4.2. It had a market capitalization of 17.6 billion dollars and a share price of 66.17 dollars, making it an attractive REIT for investment towards the end of the second quarter in 2019. It primarily deals in the metropolitan New York area. In the fourth quarter of 2019-20, it declared a dividend of 0.81 dollars for series A equity shares. It had an impressive profit of 2.3 billion dollars for a company dealing in a primarily localized area.
In summary, real estate companies have gone beyond just dealing with buying and selling of properties. Income-generating properties have been commoditized for the market. With positive speculations, there is a good chance for an increase in the real estate market demand making it extremely likely that the commodity market is also going to see an upswing, which can bring in additional investments. This has the potential to revive the economy to pre-2008 conditions.