Stockland punts $180m on Melbourne land boom

Stockland is riding the tide of government stimulus that is enticing first home buyers into the market.

Andrew Whitson. Picture: James Croucher

Residential property developer Stockland is making the most of an extended first home buyer boom, snapping up a $180m parcel of development land in Melbourne.

The company has been riding the tide of government stimulus in the wake of the coronavirus crisis, which is enticing first home buyers into the market and it is looking to benefit from extension of the schemes.

From Tuesday, first home buyers will be able to apply to First Home Loan Deposit Scheme lending panel lenders to secure a guarantee to build a new home or purchase a newly built home with a deposit of as little as 5 per cent.

The Morrison government scheme will allow 10,000 first home buyers to buy a new under the scheme that will be open until the end of June, 2021, and drive more construction.

Stockland’s acquisition is also a bet on a longer term recovery in immigration levels which traditionally drive home demand on the outskirts of major cities.

The company picked up a 131 hectare land parcel in Clyde, in Melbourne’s Casey growth corridor, as it looks to restock its residential pipeline.

It will pay the $180m over five years, partly as lots on the estate are sold. The land sits next to the company‘s existing Edgebrook estate in Clyde North.

The deal was struck with the Follett farming family and the new land parcels could accommodate more than 1400 homes, schools and a town centre.

Stockland chief executive, communities, Andrew Whitson said the purchase aligned with the company‘s strategy of restocking its residential pipeline in well connected locations. The company has delivered eight major projects in the area over the past 15 years and is bullish as lockdowns are lifted.

“The Melbourne market continues to be underpinned by strong fundamentals and we’re pleased to be able to help generate economic activity and jobs creation through our projects, particularly in light of the challenging period Melburnians have experienced,” Mr Whitson said.

Edgebrook is due to trade out in early 2021 and buyer demand could then be directed to the new estate. Stockland has sold early stages in some Melbourne estates and says that customers are now chasing affordable homes in lower density estates.

Stockland general manager of residential, Victoria, Mike Davis, said the acquisition would allow it to leverage its “competitive advantage” in the area.

The listed major has been buying around the country and in March forked out $415m to buy into a Sydney residential estate that has an end value of about $4bn.

In that play it bought the undeveloped portion of The Gables estate, a 293-hectare residential block in Sydney’s Box Hill, where more than $1bn of housing remains to be developed.