Stable outlook for residential market with improving housing affordability to underpin demand: Mirvac AGM
Mirvac chairman James MacKenzie says the outlook for the residential property market is “stable” for the near term with a stronger outlook for NSW but concerns for the outer suburbs of Melbourne and south-east Queensland.
Speaking at Mirvac’s AGM in Sydney on the occasion of its 40th anniversary and at the first meeting attended by new CEO and managing director Susan Lloyd-Hurwitz, MacKenzie said it was fair to say that the residential property market “has performed better than many international markets in recent years, and we expect it to remain stable overall in the near term”.
“Specifically we see pockets of strength in NSW combined with continued weakness in south-east Queensland and the outer suburbs of Melbourne,” MacKenzie said.
He said “improved housing affordability” was a factor that was expected to underpin housing demand in the future.
“This is a factor that Mirvac watches closely – and it is significant that from the final quarter of 2010 to the September quarter of 2012 house price affordability improved by around 25%," said MacKenzie.
He also announced that Mirvac has pre-sold 80% of the first stage of its Harold Park flagship residential development in Glebe in inner Sydney.
MacKenzie said strong sales at major development projects such as Harold Park were a testament to its “highly targeted approach” and gave it the confidence to launch the second stage of its residential development last weekend.
The majority of second-stage dwellings in Eden sold over the weekend, with terraces home selling out just hours after launching.
MacKenzie said the other key new release apartment projects include Rhodes Pinnacle in Sydney and Yarra Point in Melbourne's Docklands, with a “strong contribution” also expected from master-planned communities at Elizabeth Hills and Middleton Grange in NSW.
He said Mirvac’s residential development division “achieved considerable success during the financial year, with just over $900 million in pre-sales on hand at year’s end and the settlement of 1,807 residential lots during 2012 ahead of target".
“The business is focusing on its competitive advantage in delivering quality residential projects with new releases that target price points and locations that have been identified using detailed demographic research,” he said.
MacKenzie also used the opportunity of the AGM to thank recently departed managing director and CEO Nick Collishaw, who he said had done a good job “reviving Mirvac following the challenges of the global financial crisis.
“This included strengthening the group’s balance sheet and simplifying the business. Mirvac now has the necessary foundations to move into the next phase of its growth strategy,” he said.
However, he said the decision to get rid of Collishaw and appoint Lloyd-Hurwitz as CEO and managing director in his place was unanimous and based on her leadership skills, experience and global reputation.
“Her knowledge of the domestic and global property sector, combined with her demonstrated ability to forge strong stakeholder relationships, are the key attributes needed to take Mirvac into the next phase of our growth.
“Her strong communication skills and leadership style will augment the culture of the business which we believe is critical to delivering the Mirvac strategy.”
In her first address as CEO Lloyd-Hurwitz said Mirvac’s remain on track to achieve its 2013 target of 1,800 lot settlements.
“Across both our apartments and master-planned communities product lines, we have seen some solid results."
She also highlighted the strong sales success at Harold Park as well as 98% pre-sales success at Chatswood Era project, providing “further evidence of the relative strength of the NSW housing market which is our highest market weighting”.
“Our focused approach in Victoria has seen good results in high-density housing projects.
“At Yarra Point, we will commence settlements in the second half of this financial year.
“Yarra Point is 100% pre-sold for 2013 financial year forecast earnings, with 85% pre-sold overall.
“We continue to see signs of recovery in the WA market, with our projects at Mandurah and Jane Brook performing well against sales targets," she said.
“Queensland continues to be our weakest market with expectations of a sustained recovery still some time away.”