ACCC to investigate Stockland’s $1.3bn housing development deal

The competition regulator will look at the impact of the transaction by the country’s top listed developer on the supply of homes.

The competition watchdog has launched an inquiry into Lendlease’s sale of the bulk of its housing operation for $1.3bn to a joint venture led by fellow property heavyweight Stockland.

The global developer last December sold 12 housing communities to Stockland and a Thai joint venture partner as part of efforts to simplify its business.

But the Australian Competition & Consumer Commission has now launched a review of the deal, which includes housing estates in greenfield areas around Sydney, in southeast Queensland, and sites in Melbourne and Perth.

Stockland is already the largest listed residential developer in the country and has 30 housing estates across NSW, the ACT, Queensland, Victoria and WA.

Its partner Supalai, which listed in Thailand and is also a property developer, has interests in nine housing estates in Victoria, Queensland and WA as well as via joint ventures with developers including Mirvac, Satterley, Peet, ICD Property and Stockland.

The Figtree Hill development in Macarthur, near Appin. Picture: Jonathan Ng

Lendlease has 16 housing estates in NSW, Queensland, Victoria and WA, and is looking to offload 12 of them under the deal.

The ACCC’s investigation is focused on the impact of the proposed acquisition on competition and will look at the impact of the deal on the market for the acquisition of land for residential development.

It will also investigate whether the Stockland venture would have the ability and incentive to reduce the supply of residential housing in key growth corridors.

It will also investigate the extent to which alternative forms of housing are likely to constrain the Stockland venture from increasing prices or altering service levels.

Stockland and Supalai will split ownership of their venture, 50.1 per cent to the Australian company and 49.9 per cent to Supalai. Under the deal, the venture will pick up intellectual property in the projects and some staff will go to Stockland.

Stockland said when it struck the deal that it would position it to restock its pipeline ahead of an expected residential market recovery. Lendlease is selling a combined 27,000 lots across the 12 communities – Kinma Valley, Yarrabilba, Springfield and Shoreline in Queensland; Figtree Hill and Calderwood Valley in NSW; Aurora, Atherstone, Harpley and Averley in Victoria; and Alkimos Beach and Alkimos Vista in Western Australia.

The ACCC has asked market players about the competition between Stockland, Supalai and Lendlease, querying how much the partners compete with the global developer when buying land and supplying housing.

A Stockland spokeswoman said that the company “acknowledges the process being undertaken by the ACCC in relation to the impact of the proposed acquisition on competition”.

“Stockland has a long and proud history of delivering housing solutions across Australia, and subject to achieving regulatory approvals and relevant landowner consents, the transaction represents a step change in the reshaping of our portfolio and acceleration of our strategy,” she said.

Stockland chief executive, development, Andrew Whitson said when the deal was launched that the company was “well positioned” to ramp up development activity into a potential recovery in the residential cycle.