Enquiries Back to Pre-Covid Levels: Stockland


The impact of Covid-19 on the economy since early March has presented challenges across most areas of Stockland's portfolio, chief executive Mark Steinert says.

The country's largest residential developer saw sales contract across April, selling just 137 land lots, but said it was now in recovery mode with new enquiry levels over May recovering to be in line with pre-Covid-19 levels.

Prior to the virus outbreak, sales on its housing estates were strong and its retail centres performed well but saw a dramatic drop-off from late-March through April.

Stockland said despite economic tremors settlements were completing within similar timeframes to pre-Covid-19 levels with a reasonably low default rate over April of 4 per cent, only slightly above its long term average after having risen in March.

The developer has remained bullish due to its focus on affordable housing estates, where it sells almost 80 per cent of its land packages to owner-occupiers with first home buyers, who have remained active, represent around half of those sales.

It is also confident of an earnings pick up as more sales on higher-margin homes—such as those at Elara in northwestern Sydney's Marsden Park and Willowdale in Sydney's south-west, settle.

Steinert warned of an emerging undersupply brought forward by reduced activity across the sector and noted that the current low interest rate environment, positive credit conditions and government stimulus, particularly the job keeper subsidy, would prop up the broader market recovery.

“Despite early signs of improvement, it is still too early to identify clear trends and we remain cautious about the shape and speed of recovery of the market,” Steinert said.

“We believe the new environment will create opportunities where the strength of the Stockland brand can be leveraged for the benefit of all our stakeholders.”

The $6.5 billion company, with operations spanning residential, retail, office and logistics properties, said the outlook still remains uncertain and funds from operations and distribution guidance remain withdrawn until further notice.

The performance of the company's retirement living arm was boosted by 225 net reservations over the quarter, Stockland's strongest result for established sales in more than two years.

In line with other landlords, the tough retail environment has posed new challenges for Stockland.

Its retail figures have felt the greatest impact from the pandemic due to reduced foot traffic, down 40 per cent on pre-Covid-19 levels in mid-April, and non-essential services store closures, despite its retail centres remaining open.

In contrast, Stockland saw heavy foot traffic at its supermarkets, delivering comparable growth of 24.4 per cent for the month of March.

“Similar to the residential market, it is still too early to identify clear trends and we remain cautious about the shape and speed of recovery of the market,” Steinert said.

Last month, Stockland increased its available liquidity from $850 million while also securing $250 million of additional short term bank facilities to increase its available liquidity to approximately $1.6 billion.


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