Mirvac, one of the country’s biggest residential communities and high-rise developers, has declared the housing market slump has passed and is planning for a busy new year.
Speaking at the group’s annual general shareholder meeting in Brisbane on Tuesday, chief executive Susan Lloyd-Hurwitz said there has been an increase in sales enquiries across the residential portfolio, “which we expect to translate to sales in due course”.
“Our residential business is well-placed to take advantage of this upswing. Already 86 per cent of residential earnings before interest and tax (EBIT) for the 2020 financial year is secured, and we will have a first-half residential earnings skew with an approximate 65-35 split,” Ms Lloyd-Hurwitz said.
CommSec’s senior economist Ryan Felsman confirmed the rebound in home prices.
Mr Felsman said the CoreLogic 5-Capital City Daily Home Value Index is up by 1.2 per cent so far in November, led by gains in Sydney up 1.8 per cent, Melbourne up 1.2 per cent and Brisbane/Gold Coast up 0.5 per cent.
“The lift in housing demand, supply constraints, and record-low borrowing costs are pushing-up home prices,” Mr Felsman said.
Mirvac, which tipped the market bottom a few months ago, has shown its confidence in the sector through a series of acquisitions to boost its land bank development pipeline.
These include a capital-efficient joint venture with Boral at Wantirna South in Melbourne, which is a 171-hectare quarry site to be developed into a 1700-lot housing community with an end value nearing $1 billion.
In Sydney, Mirvac entered into an agreement to acquire an 18-hectare site at Milperra with the opportunity to develop about 350 homes, and also a partnership with Western Sydney University. It will also look for more build-to-rent opportunities.
Mirvac is also said to be on the short-list of contenders for the purchase of the $220 million home of the Nine Entertainment studios in Willoughby on Sydney’s north shore.
The current owners, Michael Jiang’s Lotus Capital and Hong Kong-based Euro Properties, bought the site for $147 million in 2015 and are looking to sell. After a drawn-out process, there is an approved masterplan for the site for 460 apartments across 10 mid-rise buildings with a forecast end value of $1 billion.
Nine Entertainment, which owns this publication, is relocating to the new Winton tower at 1 Denison Street, North Sydney from mid-2020.
But in boosting the land banks Ms Lloyd-Hurwitz said Mirvac was working with government and industry bodies to improve building standards following a number of high-profile residential tower issues.
“It is unacceptable that families who have bought or leased apartments in good faith, with the reasonable expectation that those apartments will be built to an appropriate standard, can suddenly find themselves without a home to live in, facing years of legal battles, and substantial cost to rectify buildings that should have been properly constructed in the first place,” Ms Lloyd-Hurwitz said.
Mirvac reaffirmed its full-year guidance earning growth of 3-4 per cent, and distribution guidance growth of 5 per cent.
Mirvac securities are up 0.6 per cent to $3.28.
Source: Thanks msn.com