Commercial real estate (CRE) had a bright forecast heading into 2020 before any of us knew what a coronavirus was, according to research and data from Deloitte Insights.
The real economic impact of the worldwide shutdowns will be felt for many years, as consumer behaviors change and business financial stress works its way up the supply chain. Many businesses can’t pay their rent, and that could impact the Colliers International stock forecast.
This is because Colliers International Group [CIGI] is a large real estate company with exposure in both residential and commercial properties.
That makes the company a great barometer for the post-Covid real estate industry for the 2020s. Let’s dive into the company’s economic forecast to see how they’ll do.
Colliers Is A Global Real Estate Behemoth
Colliers International is a global real estate services organization with a presence in over 68 countries around the globe. Its headquarters are in Canada, although it has a variety of localized hubs in cities like New York City, London, Melbourne, and more.
It provides a variety of services, including commercial and industrial appraisals, project management, and more, and its expansion in the 2010s flew directly in the face of traditional CRE consolidation.
The company’s investment sales team has its hands in many of the top commercial property sales around the world.
It deals with large-scale office buildings, hotels, and apartment complexes. Its recent acquisition of Dougherty’s adds mortgage, funding, and insurance operations, all of which strengthen its vertical integration.
Is Colliers International Group Stock a Buy?
For short-medium term investors, the answer is no. This stock has been battered by coronavirus and has a questionably shaky outlook for the rest of the year.
A decade ago, Colliers International was one of the top two global real estate brokerages. It hit hard times during the 2020 COVID-19 lockdowns, but it still entered 2020 among the top-tier investment recommendations from a variety of investment analysts and firms.
Several firms downgraded it in the aftermath of the lockdowns to a sell rating, with others placing it approximately in the 51st percentile of stock performances.
Considering recent market and economic changes, the firm is focusing on expansions in its commercial property sales.
In U.S. markets like Dallas, TX, these investments are particularly focused on apartments and mixed-use properties, while massive office properties are doing better in markets like New Jersey. The global scale of Collier’s operations allows it to react to localized markets with a different strategy to maximize efficiency
Risks of Investing in Colliers International Group
Like any investment, Colliers comes with a certain amount of risk. Much of it we already discussed throughout this report, but they’re worth repeating to highlight.
First there’s the aftermath of the coronavirus, which experts believe is bringing an eviction/foreclosure apocalypse as federal pandemic assistance is set to expire at the end of July.
This isn’t just a residential problem either – businesses are increasingly unable (or unwilling) to pay rent, leaving many property owners in a financial hole.
The way we work is also changing to a more virtual experience, with remote workers staying home or using existing businesses with public Wi-Fi.
This can put a strain on the firm’s office building revenue, as businesses continue to either transition to a remote-work philosophy or shutter their doors in response to the pandemic.
Each is struggling to recover from the coronavirus economic slowdown, even if at the expense of each other.
Increased competition for less money leads to slim pickings for each individual company, and it’s unclear who will come out on top. Let’s explore it.
Will Colliers International Group Competitors Beat It?
Overall, Colliers and CBRE aren’t exactly competitive, as the latter is a much larger company with more employees and assets. Other companies, like Jones Lang LaSalle [JLL] and Newmark Group [NMRK], are also pushing for more market exposure.
It’s happening at a time when the market is actually on a run toward economic progression. This gives the brokerages more capital to invest in strategic acquisitions.
The question remaining is which strategies to follow and acquisitions to make in this global climate of geopolitical uncertainty.
Trade tensions, resource scarcity, and other issues are piling up that may impact overall leasing demand and other forecasted estimates for the entirety of the 2020s.
The global supply chain has been hampered, and there’s a chance Colliers will be overtaken by a larger competitor with more resources.
This brings us to the bottom line of the Colliers International Group stock forecast.
Colliers International Stock Forecast: Conclusion
Overall, Colliers has been rated as just above average, outperforming 51% of stocks trading on the market.
It’s still rated as a sell by many top financial analysts, as the real estate market is only beginning to feel the effects of the 2020 coronavirus pandemic.
The federal CARES Act provides financial protections for many citizens and businesses through the end of July 2020, including a moratorium on eviction and foreclosure actions that will surely affect the company.
Colliers isn’t a buy at the moment, because analysts don’t believe it hit its true financial bottom in value. When government pandemic protections expire, the second half of 2020 is set to be turbulent for real estate. We’re facing a flood of evictions and foreclosures that will affect both residential and commercial sectors.
Of course, the company can regain much of its losses and eventually reach pre-pandemic market values. It just needs to strategically place itself in the right places in each market it services.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.