AVJennings profits up so buys more land for house and land packages at Cobbitty Arcadian Hills
Residential property developer AVJennings Limited has achieved a strong profit result on increased revenue of $118.5 million, up 13.7% on the corresponding period.
Increased production levels in improving market conditions were the catalyst for the strong first half results. It has previously advised affordability is an ongoing challenge but has been assisted by the benign interest rate outlook for the foreseeable future, only moderate price growth on the urban fringe of most capital city markets and Government incentives.
It has also recently noted strong interest in purchasing lot equivalents shown by third party builders and developers across the states.
AVJennings Chairman Simon Cheong advised today he expects contract signings for the year ending 30 June 2015 in the range of 1,700 to 1,900 lots; previously to was 1,500 to 1,700 lots.
Highlights for the half year ended 31 December 2014 were:
• Profit up 34.9% to $16.8 million before tax and $11.9 million after tax
• Revenue up 13.7% to $118.5 million
• Work in progress levels up 58% to 1,539 lots compared to 31 December 2013 levels
• Settlements up 22% to 660 lots (contract signings higher at 872 lots)
AVJennings CEO Peter Summers said consumer confidence was highest in New South Wales, and that Sydney remained the strongest market in the country with a continuing supply shortage and strong demand. The Sydney strength was pushing through to the Central Coast market too.
“Demand in Brisbane continues to rise with positive knock-on to the Noosa, Caloundra and Coomera markets, which are now also firmly in recovery," said Summers.
"The Melbourne residential land market remains stable, with the company generally experiencing good demand on its projects in the east and north-east of the city.
"The South Australian residential market remains stable but subdued overall.”
Lots under development continued to grow reaching 1,539 (1,264 lots as at 30 June 2014 and 974 lots as at 31 December 2013), which Summers said is a key indicator of future positive performance. The level of completed unsold stock remains stable and low.
AVJennings controlled 9,418 lots at balance date.
It recently contracted to purchase two new land parcels at Cobbitty, New South Wales comprising approximately 227 lots contiguous with its existing Arcadian Hills project (pictured above).
Arcadian Hills' first residents movied in during October 2014 as stage one of the estate had nearly sold out and the release of stage two brought forward due to demand.
Just two years ago it cut the value of its Cobbitty, NSW project where bureaucratic red tape had been costly on getting approvals at its then 43 hectares of residential-zoned land in Sydney's south-west, where it hoped 470 lots could be developed.
Peter Summers told AV Jennings shareholders that market fundamentals remained positive, with strong consumer confidence to transact in housing bolstered by low interest rates and inflation, underlying housing shortages in some markets (especially Sydney and Auckland), strong population growth and a stable domestic macroeconomic outlook over 2015-2016.