Mirvac defaults stay low, amid price moderation and downturn in foreign buyers

Staff reporterFebruary 7, 20180 min read

Residential price and volume growth was moderating, as expected, according to the listed property company, Mirvac.

In its latest report to shareholders it advised FIRB pre-sales were moderating from 24 percent of sales to 21 percent.

It completed 735 settlements in 1H18 and a further 429 settlements in January this year with lower 1H18 gross margins of 22 percent due to the mix, with FY18 gross margins expected to be around 25 percent.

It has $2.9bn of residential pre-sales. They include Eastbourne in East Melbourne (above) where revenue is tipped to come forward into the 2019 financial year.

It reported defaults of less than 2 percent in-line with long-term average.

It noted weakness in the Brisbane and Melbourne apartments.

"The residential market is moderating in line with expectations," it advised. 

Mirvac, the developer and landlord, saw its revenue for the six months to December fall 28 per cent to $984 million from $1.36 billion a year earlier, while operating profit fell a smaller percentage of 8 per cent.

The company said it awaits skewed residential settlements in the next half of the year. 

The main cause of the diversified group's decline in operating profit was lower property revaluation gains in its investment portfolio compared to the prior year.

“Although sales activity has moderated to more normalised levels in Sydney and Melbourne, we are still seeing consistent demand for well-located, quality product, particularly in our masterplanned communities," its CEO Susan Lloyd-Hurtitz said.

“A number of our forward-looking projects in Sydney are also set to benefit from new transport infrastructure, and our ability to buy at the right time has ensured we can release approximately 13,000 lots over the next four years, while taking a prudent approach to restocking our pipeline,” Ms Lloyd-Hurwitz comment.

“Our urban strategy, diversified and integrated business model, and our proven asset creation capability ensures we are on track to deliver strong growth in FY18,” said Ms Lloyd-Hurwitz.

Staff reporter

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