Residential property inquiries on the rise: Mirvac

Mirvac joins ranks of developers reporting outsize results in an improving housing market.

A Mirvac development in Sydney.

Mirvac has joined the ranks of residential developers reporting outsize results on the back of the improving housing market.

The company is on track to hit its full year earnings target as sales rise in both its apartment buildings and land estates. It is already planning new projects, including a super-tall tower in Sydney’s George Street.

The lift came after rival developer Stockland’s residential unit turned in its best quarter of the year, driving Stockland shares up by 6.5 per cent on Monday.

Mirvac is also expecting to benefit from rising sentiment in the property market.

“We have passed the bottom of the residential cycle. There are now clear signs of improvement in the Sydney and Melbourne established housing markets with lifts in loan approvals consistent with the upturn in auction market activity, prices and turnover,” Mirvac chief executive Susan Lloyd-Hurwitz said.

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Mirvac settled 613 residential lots in the September quarter and said it was on track to hit more than 2500 settlements this financial year. The company has also managed to keep defaults below 2 per cent and its residential pre-sales up at about $1.3bn.

“In our residential business, we have seen an uptick in inquiries, and we expect this to translate to sales volumes in due course,” Ms Susan Lloyd-Hurwitz said.

Mirvac released more than 240 lots during the quarter, with steady sales at its estates including Woodlea, Smith’s Lane and Olivine in Victoria, and Crest in NSW.

The national unit market has been blighted by scandals over cladding and poor engineering practices, leading to building evacuations. But Mirvac says it has sought to drive higher standards.

Ms Lloyd-Hurwitz said that as the apartment market “continues to face scrutiny, and building standards are called into question, we are actively engaging with government and other stakeholders to drive change across our industry”.

Mirvac’s office and industrial unit is also performing on the back of favourable office and industrial market conditions and hot demand for space in the Sydney and Melbourne CBDs and city fringe areas.

The company has a $3.1bn active development pipeline and has built up a position where it is chasing major projects including over-station developments in Sydney, where it is favoured to win a major project in inner-city Waterloo.

The group said its CBD-focused retail assets were posting solid results despite structural and cyclical headwinds.

“The Sydney and Melbourne markets continue to show positive fundamentals, including population growth, low unemployment and record levels of infrastructure spend. Eighty per cent of the group’s capital is now allocated to the urbanisation of these gateway cities,” Ms Lloyd-Hurwitz said.

Mirvac reaffirmed operating earnings per share guidance of between 17.6c to 17.8c for this financial year, a lift of 3 to 4 per cent, and distribution guidance of 12.2c per share, a 5 per cent rise on last year.

“There are now clear signs of improvement in the Sydney and Melbourne established housing markets, with lifts in loan approvals consistent with the upturn in auction market activity, prices and turnover,” chief executive Susan Lloyd-Hurwitz said.

AAP