Sydney’s Wolli Creek and Melbourne’s Parkville among strong performers as Australand forecasts improved residential performance in second half of 2013

Sydney’s Wolli Creek and Melbourne’s Parkville were among strong off-the-plan sellers as listed property group, Australand forecast an improved residential performance in second half of 2013.

Australand half-year after-tax profits dipped 1% to $88.4 million for the six months to June 30 due to a lower contribution from its residential division.

Revenue from its residential business fell from $260 million to $192 million as lot sales fell from 489 to 409.

The share price fell 3 cents to $3.47 following the drop in earnings having fallen 11 cents yesterday following the decision by its majority shareholder CapitaLand not to sell its stake after failing to secure an acceptable offer.

“As flagged to the market in February, the lower first half operating profit result was driven by a lower contribution from the residential division given the expected completion of a number of built form projects in the second half,” said Australand managing director Bob Johnston.

“The group, however, expects to deliver growth in operation earnings for the full year of 3% to 4% with a stronger performance expected during the second half of 2013 supported by secured residential sales and the industrial developments currently underway,” he said.

Residential sales contracts on hand increased from 1,316 to 1,793 driven by a strong pick-up across some of its Sydney projects and also a solid performance across its Victorian apartment and house and land developments.

More than half of these contracts (51%) are expected to settle in the second half of 2013 and a third in 2014.

In NSW, contracts on hand increased from 543 as of December 2012 to 905 as of June 2013

The top seller over the six months period was its Discovery Point development at Wolli Creek in Sydney’s inner south, which recorded 179 off-the-plan apartment sales.

One bedroom apartments start from $410,000 with two-bedroom apartments priced from two-bedroom apartments priced from $555,000.

NSW accounted for 22% of Australand's residential business with strong pre-sales over the half-year attributed to products being priced around the median price point.

Australand is heavily exposed to the Victorian residential development sector with 58% of its projects located in the state.

It recorded a rise in contracts on hand in Victoria from 346  in December 2012 to 508 as of June 2013 with improved land sales activity following the re-introduction of first-home buyer incentives for new homes as well as the enhanced National Rental Affordability Scheme (NRAS) expected to assist in the recovery.

Sales were steady in apartment developments with its Lume Carlton project managing 72 sales and 32 sales recorded at Parkville.

Carlton sales total 117 with contracts on hand worth $65 million.

In total 58 contracts worth $29 million have been secured at Parkville, a joint venture with Citta Property, with one bedroom apartments priced from $370,000.

Australand also reported improved trading conditions in Brisbane as affordability and interstate migration levels recover, however the Gold Coast and Sunshine Coast discretionary markets remain “challenging”.

Activity levels improved in WA with rising rents driving tenants to become owner occupiers.

There were 68 lands sales at Byford and stage two of  Cockburn Central project at Kingston is now 95% pre-sold.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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