Stockland has upgraded its forecast for settlements for this year after a wave of investor inquiries off the back of low interest rates and government stimulus.
The country’s largest listed residential developer said it was on track to settle 6300 home lots this year as sales enquiry levels surged to 33,000, 40 per cent above the company’s long-term average.
Stockland said it was “well positioned” to capitalise on the demand of the “up cycle” with 70 per cent of its 81,000-lot land bank activated, 86 per cent of it on Australia’s eastern seaboard.
During the quarter, Stockland secured the settlement of 1510 lots while 3100 are due to settle next financial year.
Outgoing Stockland chief executive Mark Steinert said the developer had been actively restocking its pipeline with high-quality residential projects after the sharp market rebound and growing trend towards community living.
“Low interest rates, credit availability, high household savings and demand for high quality product contributed to an elevated net sales result,” he said.
“We estimate that only 10 per cent of the lots exchanged up until March are eligible for the government subsidy, further demonstrating the strength of the market.
“These conditions are forecast to continue for some time, even with the conclusion of HomeBuilder, given the equilibrium of supply and demand in most housing sub-markets we operate in.”
Stockland added almost 2000 new lots to its pipeline during the quarter including 900 lots from recent acquisitions at Wantirna in Victoria and Piara Waters in Western Australia.
In its retirement living portfolio, Stockland secured 190 unit sales, reflecting the increased appeal of village living and improving residential market conditions and marking its strongest quarterly result in more than four years.
The developer has now secured the first 25 sales at its Aura community in south-east Queensland, of the land-lease product targeted at affordable retirement living.
The company said it also will begin sale at its second land-lease community in Minta, on Melbourne’s south-east, in June.
Stockland said it expects supply to remain low across 2021 and fall further in 2022 due to easing of demand.
The developer said it forecast shortages of englobo land in Sydney and Brisbane to limit supply over the medium term, with Melbourne to balance and moderate oversupply expected in Western Australia.
Stockland now stands to benefit from the federal government’s extension to HomeBuilder, which has given added an additional 12 months for construction commencements.
The diversified developer also owns a wide range of assets including shopping centres clustered in housing estates it has constructed.
Last year its malls suffered from the pandemic, with significant falls in foot traffic, non-essential store closures and sharp sales declines in specialty stores.
In its retail portfolio, Stockland said comparable third-quarter sales grew 3.2 per cent and specialty sales rose 9.4 per cent, showing a continued recovery.
Stockland’s shopping centre occupancy was at 99.7 per cent and it forecast abatements of less than 2 per cent would be applied to third quarter of 2021 billings.
Occupancy in the company’s office portfolio rose to 94.1 per cent with a weighted average lease expiry of 2.7 years.
Stockland also secured leases of over 230,000sq m of new logistics space across the year and added to its $5.9-billion development pipeline.
It maintains investment grade credit ratings of A-/A3 with stable outlook from S&P and Moody’s respectively while holding $2.2-billion in liquidity.