Housing boom boosts Stockland sales

Demand for house and land packages within property developer Stockland’s communities has only increased as the housing boom continues.

Stockland managing director and chief executive Tarun Gupta. Picture: Jane Dempster

Demand for house and land packages within property developer Stockland’s communities has only increased as the housing boom continues.

The net number of residential sales completed over the September quarter increased 8 per cent to 1,947 lots compared to the same period last year, just before the current market conditions set in. Inquiries for property also remain strong, with the company expanding its pipeline to keep up.

Stockland’s new chief executive and managing director Tarun Gupta addressed his first annual general meeting on Tuesday, since stepping into the role five months ago.

Mr Gupta said the company maintained its low gearing and ample liquidity through the first quarter of the financial year, which was underpinned by a solid operational performance across both the residential and commercial arms.

“During this quarter we continued to deliver on our key strategic priorities, rebalancing our portfolio to provide future growth while generating stable long-term returns,” he said

“Our Communities business maintained its strong residential sales momentum with new inquiries remaining elevated. The Commercial Property business saw occupancy rise to 99 per cent across the Logistics and Retail portfolio.”

While buyer demand remains elevated following the wrap up of the pandemic HomeBuilder stimulus, eyes are now watching the impact of the post lockdown re-emergence and tightening of lending through macroprudential measures.

Despite this, the developer is strategically restocking its land banks, with around 5900 lots acquired and an additional 430 consolidation lots at The Gables in New South Wales, 1400 lots across Victoria and 4100 lots in Western Australia.

Based on progress to date and the acceleration of construction across Stockland’s projects, no material impact is expected on production although there will be a higher volume of settlements in the fourth quarter of the financial year.

Some rental relief for tenants is being negotiated in the developer’s commercial business due to the lockdowns in Sydney and Melbourne, but leasing remains around 99 per cent across Stockland’s retail town centres and logistics, life sciences and technology portfolios.

The business is currently undertaking a strategic review that will review what Stockland considered to be the four key long-term drivers shaping the industry: urbanisation; the impact of rapid technological advancement; the continued growth of institutional capital flows; and the critical importance of environmental, social and governance. It is due to be presented to the market on November 8.

Stockland has forecasted Funds From Operations per security will be in the range of 34.6 to 35.6 cent. It is likely to skew higher in the second half of the year than in recent times, reflecting strength in the housing sector and retail rental abatements.