Jobs to go at Mirvac Group

Mirvac Group chief executive Campbell Hanan at Mirvac’s Willoughby development NINE in Sydney. Picture: NCA NewsWire, Nikki Short

Mirvac Group is understood to be the latest property company embarking on job cuts, with sources reporting in the market that the $9bn diversified property group let a number of staff go on Tuesday.

It comes hot on the heels of sweeping job cuts by rival Lendlease, which The Australian reported last week revealed it had axed the positions of more than 700 workers, with most cuts offshore.

It also happens at a time that Mirvac Group is in final negotiations to buy land lease communities developer Serenitas with Pacific Equity Partners in a deal that could be worth as much as $1bn.

DataRoom understands that the transaction would be a 50-50 split between PEP and Mirvac, with the latter contributing land for modular housing developments.

A Mirvac spokesperson said the company had made a small number of redundancies in pockets of the business.

Some of the redundancies were the result of an earlier organisational restructure and some roles were no longer required due to changing business conditions.

The group said in its 2022 annual report that its headcount was 1,550, with over 1000 staff based in Sydney.

Market experts are anticipating that any redundancies would likely be in its residential development unit.

Australian listed real estate investors are bracing for lower presales from residential developers in 2024 with the borrowing capacity for first home buyers down about 30 per cent.

Settlements would be lower in the following two years as a consequence.

Compounding challenges is that in the state of Victoria, the cancellation rates are up at least 60 per cent for new sales and land sales compared to the market peak.

In Western Australia, deposits are fully refundable on new residential land lots by law.

And the Reserve Bank of Australia suggests that 15 per cent of mortgage holders currently have negative cash flow on the back of soaring interest rates.

While Mirvac is the latest to be the topic of conversation on job cuts, some believe that there will be redundancies throughout the industry, with rival Stockland not immune when it comes to shedding staff.

Analysts have slashed their expectations for 2023 financial year residential settlements at Stockland to about 5000 after the company indicated last year that they could be as high as 6000 for fiscal 2023.

Last week, The Australian reported that Lendlease shares plunged 5 per cent on news of cuts to staff.

Lendlease has also placed a number of assets on the market to avert an equity raising, including a stake in its communities business that is on offer through Macquarie Capital and its stake in its Retirement Living operation.

Sources have questioned whether there are any parties around the hoop at all for the communities offering after it has been on the block for some time.

Stockland showed interest, but only for the unit as a whole.

It has also struck a deal to bring forward the payment of about $600m in proceeds from residential developments at Sydney’s Harbourside Barangaroo South project.

Initially, 740 jobs at Lendlease will go, the company said last week, with 15 per cent of its total workforce laid off and about 5 per cent of its local workforce being affected as it looks to lower costs amid weakening office property demand.

The latest cuts are expected to save the company an additional $80-$100m on an annualised basis from fiscal 2025.

Lendlease maintains its earnings guidance and plans to complete $8bn of projects annually.