PPP plan to revive residential

PROPERTY developers will become more involved with government through private-public partnerships in an effort to support the flagging residential sector.

By InvestSMART · 4 Apr 2012

By InvestSMART ·
4 Apr 2012

Comments

PROPERTY developers will become more involved with government through private-public partnerships in an effort to support the flagging residential sector.

Matthew Quinn, the managing director of Stockland, said with housing affordability at such a precarious point, developers were now approaching state and federal governments to help fund infrastructure projects as a support to their own developments.

"More PPP deals will be struck as developers look to manage the risk and help build the roads and infrastructure," he said after a Committee for Economic Development lunch in Sydney yesterday where he was guest speaker. "We will be talking to all forms of government to discuss these issues."

Mr Quinn's comments come a week after he issued a warning that profit for the full year would be down about 3.5 per cent following a slump in sales in the residential sector.

Under Mr Quinn, Stockland pursued a three-Rs strategy of retail, residential and retirement.

He said the downgrade in residential was necessary as a combination of wet weather in January and a rise in interest rates by the banks meant buyers disappeared. It was also part of continuous disclosure because Stockland is undertaking a share buyback and may be seen as having insider information.

"I have never seen such a material shift in sentiment in my many years in this job as I have over the last six weeks," Mr Quinn said. "It's banks increasing rates out of cycle and wet weather that has pushed [investors] to make a decision to do nothing."

He said there was a fifth bank emerging, known as the parent bank, which could be called upon more frequently to help first home owners enter the market.

"The dinner party talk has shifted from how big is my house to how small is my mortgage," he said. "Stockland is leading the charge by building smaller houses that people can afford."

For retail, Mr Quinn said the landlords and tenants that thrive were those that adapted to the internet and the structural shift in consumer spending.

He forecast equilibrium would be reached when internet sales account for about 20 per cent of all retail spending.

"Discretionary spending is down, but there is more to life than conspicuous consumption. People are social creatures and as a result malls will evolve from traditional shopping centres to community areas," he said.

Go to Google News, then click "Follow" button to add us.

Share this article and show your support

Frequently Asked Questions about this Article…

What did Stockland's managing director say about public‑private partnerships (PPPs) for residential development?

Matthew Quinn, Stockland's managing director, said developers are increasingly approaching state and federal governments to use public‑private partnerships (PPPs) to help fund infrastructure for their projects. He expects more PPP deals as a way for developers to manage risk and help build the roads and infrastructure that support new housing.

How could greater use of PPPs affect housing affordability and residential property projects?

According to the article, PPPs are being explored because housing affordability is precarious. By sharing the cost and risk of infrastructure with government, developers hope to make projects more viable and support new supply — which could help address affordability pressures, especially where infrastructure is a barrier to development.

Why did Stockland warn that full‑year profit would be down about 3.5%?

Stockland issued a warning that full‑year profit would be down about 3.5% following a slump in residential sales. Matthew Quinn said the slowdown was driven by wet weather in January and banks increasing rates 'out of cycle', which caused buyers to disappear.

What is Stockland's 'three‑Rs' strategy and why does it matter for investors?

Stockland pursues a 'three‑Rs' strategy focused on retail, residential and retirement. For everyday investors, that signals a diversified business model across shopping centres, housing development and retirement communities — each area reacting differently to market trends like e‑commerce or housing demand.

What did Matthew Quinn say about building smaller houses to help affordability?

Quinn said Stockland is 'leading the charge by building smaller houses that people can afford.' He noted a shift in consumer priorities from 'how big is my house' to 'how small is my mortgage', suggesting the company is adjusting product sizes to meet affordability needs.

How is the retail sector evolving and what does that mean for landlords and tenants?

Quinn said landlords and tenants that thrive are those who adapt to the internet and the structural shift in consumer spending. He forecast equilibrium when online sales represent about 20% of all retail spending and expects malls to evolve from traditional shopping centres into community areas as discretionary spending changes.

What did the article say about a 'parent bank' and help for first home buyers?

Quinn mentioned a fifth bank emerging, which he called the 'parent bank'. He suggested this bank could be called upon more frequently to help first home buyers enter the market, though the article did not provide further details on how that would work.

Why did Stockland provide a residential downgrade while doing a share buyback?

The article says the downgrade in residential was necessary as part of continuous disclosure because Stockland is undertaking a share buyback. Providing the downgrade reduces the risk the company could be seen as holding insider information while buying back shares.