South East Queensland’s residential momentum continues: Stockland

The South East Queensland market is gathering momentum, Stockland managing director Mark Steinert said in his address at the company’s annual general meeting earlier this week.

Steinert said Melbourne is steady with high levels of activity, while Perth’s vacant land market is continuing to moderate.

Stockland’s newly released projects, Elara and Willowdale in New South Wales and Calleya in Western Australia, have seen strong demand. Meanwhile, their major projects in Victoria’s Lockervie and Davis Road, as well as Queensland’s Caloundra are progressing well for a 2015 launch and 2016 settlements.

“Overall we have around $460 million of redevelopments underway and $700 million of redevelopments in our next wave of commencements, all of which are expected to deliver incremental internal rates of return of 12-14% and 7-8% stabilised FFO yields,” Steinert said.

He noted that as part of the growth strategy for Stockland they have acquired 2,300 lots adjoining their successful projects that will provide returns at or above their hurdle rates.

“We also made good progress establishing our strategy to reach new customers with medium density products and completed homes and this will see us commence work on 550 new homes in FY15,” he said.

Their projection is that they are on track to settle at the top end of 5,000 to 6,000 net deposits through the cycle range “assuming current residential market conditions continue”, given the first quarter saw 1,652 net deposits, which was noted as the strongest period in four years.