Why this ASX real estate stock is a compelling buy according to Bell Potter

ASX real estate stocks have been amongst the worst performing sectors in 2026. 

The S&P/ASX 200 Real Estate Index (ASX: XRE) is down roughly 10% year to date.

This sector in particular has been impacted by higher interest rates, tighter credit conditions, and reduced property valuations. 

These headwinds have all contributed to significant share price declines for many real estate stocks. 

However, it has also created buy-low opportunities for quality companies in the sector. 

One such opportunity is GemLife Communities Group (ASX: GLF). 

Company overview 

GemLife (GLF) is a developer, builder, operator and owner of over 55s lifestyle (land lease) communities (LLC). 

GLF generates recurring rental income from c.2,000 occupied homes and development profits from a further c.8,000 development sites representing 10+ years of pipeline.

Its share price has fallen almost 10% in 2026. 

However the team at Bell Potter is tipping a rebound following the company’s promising AGM operating update.

Tracking to expectations

GemLife Communities said at its AGM that trading is continuing broadly in line with expectations. 

The company reaffirmed its CY26 guidance, expecting earnings per share of 28.5c to 30.0c and around 420 property settlements. This is largely consistent with Bell Potter and market forecasts.

Management said average selling prices are tracking in line with, or slightly above, the second half of CY25 levels, while home build margins are expected to remain around 50%, similar to last year. The company also noted that settlements are continuing to track positively against its full-year target.

Bell Potter made small adjustments to its earnings forecasts for CY26-28 to account for higher expected development and operating costs, as well as updated interest rate assumptions. 

Overall, Bell Potter revised CY26-28 EPS forecasts by between -8% and +1%, reflecting lower margin assumptions due to higher development costs in CY27/28. 

Strong upside remains according to Bell Potter

Based on this guidance, the team at Bell Potter moderately reduced its share price target to $5.65 (previously $6.15). 

From yesterday’s closing price of $4.59, this indicates an upside potential of 23%. 

There is still some water to go under the bridge this year, but GLF’s initial guidance range remains achievable in our view with our focus on the ground work for CY27 given likely lower housing turnover due to budget driven residential housing uncertainty and potential for cost inflation contributed by Brisbane Olympics in 2030.

We continue to monitor sales progress vis-à-vis cashflow and the balance sheet (29.5% as at CY25), but today’s update is encouraging and consistent with our expectations.

The post Why this ASX real estate stock is a compelling buy according to Bell Potter appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.