Mirvac Group says residential lot sales remained slow in the first quarter of 2023-24

Property giant Mirvac says residential sales slow in first quarter of 2023-24 but presales have lifted to highest levels in 12 months.

Property giant Mirvac Group’s residential sales remained slow in the first quarter of 2023-24 while the company took its first step into the land lease market.

In an operational update the company said it settled 192 residential lots in the September quarter, with defaults remaining low at 0.5 per cent as the market absorbed an unprecedented series of interest rate rises.

However, Mirvac told the ASX it was encouraged by a modest pick-up in presales to $1.9bn, from $1.8bn in the previous quarter, its highest levels in 12 months.

Mirvac’s Group chief executive Campbell Hanan said residential sales activity remained subdued for first-home buyers.

“However, leads and inquiry levels were elevated, most notably at our newly released apartment projects in Melbourne,” he said.

“Upgrader and downsizers remained the most resilient. A restricted supply outlook, our pipeline of shovel ready projects, and our strong brand and reputation, position us well to take advantage of the pick-up in overseas migration currently underway over time.”

Mr Hanan said Mirvac made progress in the quarter against its key strategic objectives having

progressed its $1.2bn asset disposal program with exchange for sale of its half share of 60 Margaret St and its MetCentre retail podium in Sydney for $389m.

The funds will aid the purchase of the $1bn Serenitas land lease platform alongside its partners and its ongoing development pipeline.

“The transaction marks a significant first step into land lease communities and expands our residential customer offering in a deeply undersupplied market,” Mr Hanan said.

An artist's impression of Mirvac's redevelopment of Harbourside, Darling Harbour, Sydney.

Mirvac said in the quarter 44,500sq m of office space was leased and a further 39,500sq m was under heads of agreements, although occupancy edged down to 94.7 per cent from 95 per cent the previous quarter.

Industrial occupancy declined to 98.8 per cent compared to 100 per cent but gross leasing spreads accelerated to 15.9 per cent.

Over the quarter the Switchyard business park in western Sydney was finished and 98 per cent leased and demolition was completed for the construction of its $2bn Harbourside mixed-use project at Darling Harbour.

Mirvac said subject to no material change in the operating environment, it has maintained its operating earnings per share guidance of 14.0-14.3 cents per stapled securities (cpss) and dividend per share guidance of 10.5cpss for FY24.

In an analyst’s note Jarden Australia rated Mirvac as “outperform” saying while residential was soft as expected, Mirvac remains well placed in an under-supplied market once near term conditions turn.

Mirvac shares weer down 3.5 per cent at $1.94 at 1515 (AEDT).