Stockland rides strong surge in sales

Stockland is expecting a strong result in the second half this financial year and into 2021 due to surging residental sales.

Stockland chief executive Mark Steinert. Picture: Jane Dempster

Housing developer Stockland is expecting a strong result in the second half of this financial year and into 2021 thanks to surging inquiry and sales levels on the back of the residential property revival.

The number of property inquiries was up 200 per cent last month on the same time last year. It followed a bumper quarter for the masterplan community developer, with a 60 per cent increase in sales during the last three months of 2019.

While the ASX-listed company said it was still on track to deliver its guidance for the financial year, chief executive Mark Steinert indicated that the full effects of the June resurgence of the property market would probably not be seen until the second-half results, before spilling into 2021.

The boost was attributed to a combination of ­improved sales due to be settled in the second half of the financial year and the recognition of profit from the divestment of The Grove and Merrylands Court projects in Sydney and a joint venture project on the Sunshine Coast with Capital Property.

“We have indicated in this ­release that in FY21 we expect this significant lift in settlement volumes to be over 5800, which is moving up towards the top of the cyclical range that we’ve seen historically,” Mr Steinert said.

The residential property and retirement portfolios helped the developer deliver a 68.1 per cent increase in profit to $504m through the first half of the 2020 financial year. Funds from operations rose 5.6 per cent to $384m during the last six months of the year, with net tangible assets valued up 2 per cent to $4.12 a share.

Guidance remained the same despite the uptick, weighed down by concerns about voluntary ­administrations that may affect the developer’s retail town centre portfolio. In the past six months homewares and fashion brands Harris Scarfe, Jeanswest, Bardot and ­Colette by Colette Hayman have fallen into the hands of administrators, affecting projections for rental returns during the ­financial year. While Stockland heads will watch the situation closely, the balancing of the rent roll to more prominently feature low and non-discretionary outlets facilitated first-half like-for-like growth of 0.7 per cent to $209m.

Commercial property was down 1.7 per cent at $308m, while office and logistics increased 7.1 per cent.

While the residential arm of the company beat the expectations of several analysts, they said that the developer had underperformed in the first half of the financial year. ­Investors were not deterred, with the stock climbing 1.4 per cent to $5.19 following the result announcement.

Sydney and Melbourne led the residential charge, with the developer removing incentives from east coast markets and raising ­prices in the capitals as confidence in housing continued.

Demand is so high at present that 12 lots at Stockland’s northwest Sydney development at Marsden sold out within two hours after more than 40 groups queued for a chance to buy.

The revival in residential is ­expected to give the retirement living portfolio a boost over the next 24 months as over-55s look to downsize.

A 12 per cent rise in sales in ­established communities during the first half of the financial year helped to stem the 13.8 per cent fall within the portfolio during the first half.