Stockland continues to head to affordable greenfields as it exits apartment market

Stockland is continuing its exit of the apartment development market and is focusing its efforts on greenfield house-and-land projects, according to residential CEO Mark Hunter.

Hunter says that contrary to what may be believed about apartments, detached houses will remain the “predominate form of housing supply for many years to come”.

This trend he says is further evidenced in the fact that among the established dwelling stock, 79% of dwellings are separate houses.

“It’s the largest market segment. You can stage your capital investments and you can adjust your product mix according to demand to achieve higher returns,” Hunter says.

“Developing residential housing on vacant land is a lower risk than building houses or apartments.”

During a presentation to investors in Queensland, Hunter showed that greenfields are key to meeting future urban housing needs, accounting for at least 50% of total supply in Perth, southeast Queensland and Sydney and 47% of supply in Melbourne up until 2030.

Stockland has forecast the demand for vacant land and project home sales as 85,000 out of a total annual demand of 160,000.

Besides the demographic reasons, Hunter says there are a limited number of available sites for apartment projects.

Stockland has identified 26 corridors where demand for new housing remains high and meets its criteria for development, including strong population and job growth prospects, a commitment to infrastructure investment and a lack of competition that could lead to a net oversupply.

“A corridor must tick all the boxes, otherwise we won’t invest in that corridor,” he says.

For the 2012 financial year, Stockland’s new projects comprise two in Western Australia, two Queensland, one in NSW and two in Victoria.

Western Australia and Queensland will be the focus for the 2013 financial year.