Stockland on track for growth in south-west
Plans include the construction of about 3000 dwellings, mainly homes, in a master plan that also includes a primary school, neighbourhood shops, sports fields, open spaces and recreational areas. The development will be located about 1½ kilometres from the station that will be on the new south-west rail link, under construction.
The area has been identified as a growth engine for the NSW government and is becoming an election hot spot for the federal government and federal opposition.
If approved, the new area will be adjacent to Camden Valley Way, which is also undergoing a major upgrade, and have access to the M7 and M5 motorways.
The project comes at time when the NSW residential market is showing signs of improvement.
Stockland's new chief executive, Mark Steinert, who releases details of his strategic review of the business on May 13, said the first lots in the project are expected to be settled in the next financial year.
Under his review, Mr Steinert is expected to change the group's present "three R" strategy of retail, residential and retirement, to the more traditional balance of office, retail, residential and development activities.
That could see the company return to a focus on higher-density apartments and the possible float or joint venture of its retirement assets.
Analysts said the East Leppington mixed-use project would be a boost for 2014-15 earnings.
Stockland head of residential Mark Hunter said on Wednesday there were signs of a rise in demand for new homes in Sydney's south-west growth corridor and that the planned East Leppington community would position the group "well for the future".
Mr Hunter recently revealed a 64 per cent drop in the group's residential communities reported operating profit, to $28 million, in the half-year results to December 31.
In February, Mr Hunter said lot sales were down 6 per cent on the previous year, while operating profit margins fell to 7 per cent, albeit affected by the change in capitalised interest policy.
"There has been little or no price gains for us," Mr Hunter told investors at the half-year results. "In fact, prices have decreased across most corridors."
Analysts at Bank of America Merrill Lynch said in a report this week that the downside risks for Stockland in the year ahead remained a further deterioration in debt markets, a protracted downturn in Australian residential markets and significant squeezing of development margins.
Frequently Asked Questions about this Article…
Stockland’s East Leppington project is a proposed roughly $1 billion mixed‑use residential development in Sydney’s south‑west growth corridor. Plans show about 3,000 dwellings (mainly homes) plus a primary school, neighbourhood shops, sports fields, open space and recreation areas. The site is about 1.5 kilometres from a new station on the south‑west rail link, adjacent to Camden Valley Way with access to the M7 and M5 motorways.
Analysts say the East Leppington mixed‑use project should boost Stockland’s longer‑term earnings and specifically be a positive for 2014–15 earnings. Stockland’s management also expects the development to support future revenue as lots are delivered and sold.
According to Stockland’s new chief executive Mark Steinert, the first lots in the East Leppington project are expected to be settled in the next financial year (as stated in the company’s strategic review comments).
Mark Steinert is reviewing the business and is expected to shift away from the current 'three R' strategy (retail, residential and retirement) toward a more traditional mix of office, retail, residential and development. That could mean a renewed focus on higher‑density apartments and the possible float or joint venture of some retirement assets.
Stockland’s head of residential, Mark Hunter, reported a 64% drop in reported operating profit for residential communities to $28 million in the half‑year to December 31. Lot sales were down about 6% year‑on‑year and operating profit margins fell to around 7%, partly affected by a change in the capitalised interest policy. Management also noted little or no price gains and price declines across many corridors.
Stockland’s head of residential said there are signs of a rise in demand for new homes in Sydney’s south‑west growth corridor, and that the planned East Leppington community would position the group 'well for the future.'
Analysts at Bank of America Merrill Lynch flagged several downside risks for Stockland, including a further deterioration in debt markets, a prolonged downturn in the Australian residential market and significant pressure on development margins.
The article says the strategic review could see Stockland consider a float or a joint venture of its retirement assets. That is presented as a possible option under review rather than a confirmed decision.
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