It has been a tough year for the Lifestyle Communities Limited (ASX: LIC) share price.

Since the start of 2022, this retirement communities company’s shares have lost a third of their value.

Is the weakness in the Lifestyle Communities share price a buying opportunity?

One leading broker appears to see the weakness in the Lifestyle Communities share price as a major buying opportunity.

According to a recent note out of Goldman Sachs, its analysts have a conviction buy rating and $24.65 price target on the company’s shares.

Based on the current Lifestyle Communities share price of $13.87, this implies potential upside of almost 80% for investors over the next 12 months.

Why is Goldman so bullish?

There are four key reasons why Goldman Sachs is bullish on Lifestyle Communities. These include structural drivers, the pace of its land acquisitions, first home buyer support, and the overall valuation of the Lifestyle Communities share price.

In respect to structural drivers, Goldman explained:

Continued ability to deliver supply against structural growth in demand for land lease: LIC is well-placed to provide supply to a growing cohort of over 50’s with limited savings outside the family home seeking to free up equity. In the near term, we see potential modest house price declines offset by LIC’s favourable pipeline and inventory position, coupled with a strong value proposition for incoming home owners, with the cost of an LIC home reaching <70% of the median house price in some areas (vs. ~c.80% typically), thus providing pricing support.

As for its valuation, the broker highlights the following:

[D]espite a rising rate environment (our GS Macro team forecasts peak-to-trough house price declines of 10% and a year-end policy rate of 2.60%) we continue to see valuation support for lower or maintained cap rates across the Australian land-lease sector, and would expect to see spreads decline.

LIC generates low-risk, annuity rental income. RLLCs (Residential Land Lease Communities) are becoming an institutional-grade property sub-sector, with increasing demand, particularly from offshore institutions/pension funds/corporates. At a business level, LIC trades on 25x FY23 P/AFFO vs. the median of peers at 23x, yet it offers a +32% 3-year AFFO CAGR (FY21-FY24E) vs. peers at only +11% CAGR.