Gold Coast development: Sunland managing director says the company won’t be cutting prices amid tough market conditions
Developer Sunland — which has a heavy presence in the Gold Coast property sector — won’t look to cut prices at its projects despite the downturn in the housing market.
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DEVELOPER Sunland — which has a heavy presence in the Gold Coast property sector — won’t look to cut prices at its projects despite the downturn in the housing market.
The formerly Gold Coast-based developer, which now calls Brisbane home, yesterday reported full-year net profit fell 49 per cent to $17.7 million from $34.7 million in FY18.
The company said the underlying result — which strips out one-off items — was $26.7 million when the $9 million writedown of its Bayside project in Townsville was excluded. The result was well short of its $27 million to $30 million profit guidance.
Sunland was the second developer in two days to report a fall in net profit after Villa World on Tuesday reported a 47 per cent drop in net profit to $22.9 million.
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Managing director Sahba Abedian said it was a sound result given “considerable challenges” in the marketplace.
Mr Abedian said inquiry rates had increased but buyers remained cautious.
“I think the next 12 months will be the same as the past six months, which is increased inquiry across the portfolio. That does obviously translate into sales but it is not to the level where one would glean sufficient comfort to say the market is in full recovery.”
Mr Abedian said the company views the change as a positive one.
“It allows for the larger and stronger development groups that have a strong record to continue to deliver on their portfolio,” he said.
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“Usually what happens at this point in the cycle is that the developers that are less experienced exit the marketplace and that is what we’re observing.”
Mr Abedian said the challenging market has not forced the company to rethink pricing on its projects. He said the Gold Coast remains a strong performer for the company.
Prices for units in its luxury 272 Hedges Ave tower in Mermaid Beach, which is under construction, start from $1.8 million while two-bedroom apartments at Marina Concourse in Benowa start from $699,000.
“We don’t see pressure for pricing, actually I would dare say the pricing is very stable and there is potential for growth, particularly in southeast Queensland where the bulk of our portfolio is,” he said.
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“I would say the pressure on pricing is most felt in Sydney and Melbourne where we have sold out of our portfolio and are gaining development approvals for the balance of the projects which will go to the market at the end of or early next year.”
Sunland reported revenue down on the previous financial year, with the group generating $277.6 million from property sales, down from $321.6 million the previous year and logging 382 settlements, down from 487.
Earnings per share were down from 23¢ in FY18 to 13¢ in FY19, however it wasn’t all bad news for investors, as the group announced a final franked dividend of 4¢, bringing the full-year dividend to 8¢ — 2¢ higher than the previous financial year.
Sunland reported increased balance sheet capacity, with $19.8 million in cash and $185.4 million in undrawn working capital, and said it had reduced its overall gearing to 24 per cent on a debt-to-assets ratio.
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The group said a share buyback had reduced the company’s shares on issue by 58 per cent in the past decade, with the ratio of net tangible assets per share increasing from $2.47 in FY18 to $2.56 in FY19.
As at June 30, the group had 13 active projects along Australia’s east coast and a $3 billion portfolio comprising 4292 residential homes, urban land lots, multistorey apartments, and an emerging retail and commercial portfolio.
This includes the luxury 44-storey 272 Hedges Ave high-rise in Mermaid Beach and the boutique Magnoli Apartments mid-rise apartment development in Palm Beach on the southern Gold Coast.
It recently launched construction of The Lanes development on a 42ha site in Clear Island Waters.
Shares closed yesterday up 2.5¢, or 1.58 per cent, at $1.60.
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