With development slowing, property companies slash jobs
The property industry has been hit by a wave of redundancies as large companies combat the stalling commercial market with cost cutting in traditional areas.
Big players have been hit by a fall-off in development activity, with many casualties coming in these areas as office projects are canned and plans large shopping centres expansions are on ice.
Industry players said companies were under pressure to increase revenues but many were finding this tough as projects were hard to stack up amid rising building costs, and they were turning to job cuts.
Industry players said that cuts had been deeper than during the global financial crisis, when big property companies restocked their balance sheets by undertaking equity raisings. But they have not done so in this cycle in order to preserve investor returns.
Big names to make cuts include listed diversified property group Stockland and office and funds powerhouse Dexus. Shopping centre group Vicinity Centres had also trimmed its development team, which has a roster of long-dated projects.
The cuts are coming partly as new chief executives put their stamp on companies with Stockland chief executive Tarun Gupta reorganising the company to focus on high returning areas like land lease and logistics.
Stockland last year tapped former AMP Capital real estate boss Kylie O’Connor as CEO of investment management and long-time residential property head Andrew Whitson became chief executive, development. The executive changes have cascaded down the ranks with staff exiting as the business takes on a new focus.
“Late last year, we announced the evolution of our operating model and structure to be more tightly aligned with our strategy and support our growth ambitions. These changes have had an impact across some parts of our business as we continue to evolve the organisation and, at the same time, we continue to add more roles in our growth sectors,” a Stockland spokeswoman said.
Stockland will also take on staff when it finalises the acquisition of Lendlease’s $1.3bn local housing unit.
Dexus is also reshaping its operation – partly as it comes off a strong period of building up after it took on staff from AMP Capital’s local platform and the APN business.
New chief executive Ross Du Vernet is now looking to refine the group’s model, which includes a strong focus on infrastructure and funds management even as roles are cut.
A Dexus spokeswoman said the company “has been reviewing its operating model to drive investment performance for all investors across the platform”.
“In the context of the challenging environment, cost savings will be realised where appropriate,” she said. “There will be no impact to Dexus’s fiscal 2024 guidance or change to services provided.”
The company’s new operating model will be in place from July 1 and the company flagged that new roles would also be created. Further details on the company’s operating model and other priorities will be released at Dexus’s full-year results in August.