Mirvac downplays settlement delays
Property developer Mirvac has reaffirmed guidance for the full year despite “mixed” conditions in the residential market across the country as foreign buyers delay settlement and Perth is hit by the mining downturn.
The diversified property group, which has assets in the office, industrial, retail and residential spaces, said in its first quarter update it still anticipated a “very strong year” with operating earnings of 14-14.4 cents per share despite a few headwinds.
“We have made a solid start to what we are expecting to be a very strong year for Mirvac, with metrics in the investment portfolio remaining high and steady progress made in completing settlements within our residential business,” managing director Susan Lloyd-Hurwitz says.
“We achieved a record number of residential lot settlements last year, and are targeting over 15% growth in FY17. I am pleased to say we are tracking well, with over 660 residential lot settlements achieved in the first quarter, and we expect the majority of settlements to fall into the second half of the financial year.”
Residential conditions continue to be mixed nationally
Lloyd-Hurwitz does, however, caution on rising settlement risk, with signs foreign buyers are beginning to pull back.
“We have seen default rates for the quarter sit slightly above our historic average of 1%, however, we have resold all defaulted lots marketed for sale and we remain comfortable with the contingency we have in place for our full year earnings outlook,” she says.
“While we continue to experience settlement delays from foreign buyers, settlements overall are tracking in line with expectations, and we continue to carefully monitor and manage our settlement risk profile.”
Price growth remains positive in Sydney and Melbourne, relatively steady in Brisbane and weak to steady in Perth
Mirvac adds that its experience of the residential sector appears to mirror that of the data seen over the past 12 months, with a significant variance in activity from the east to west coast.
“Residential conditions continue to be mixed nationally,” the company says in the Q1 report.
“In Sydney and Melbourne, where Mirvac has an overweight exposure, indicators, such as above average levels of auction clearance rates, point to solid demand, supported by a competitive lending environment and increasing urban population growth.
“Price growth remains positive in Sydney and Melbourne, relatively steady in Brisbane and weak to steady in Perth.”
This article originally appeared on www.theaustralian.com.au/property.
