This article is from the Australian Property Journal archive
STOCKLAND has restocked its residential pipeline with the $180 million acquisition of a 131 hectares land parcel in Melbourne’s south east, as the stage four lockdown failed to deter buyers from spending more than $250 million on lots during September.
Located in Clyde, 59 kilometres south east of Melbourne’s CBD, and within the approved Cardinia Creek South Precinct Structure Plan, the site at 470 Pattersons and 1965 Ballarto Rd is less than two kilometres east of Stockland’s existing Edgebrook project that is expected to trade out early in 2021.
The masterplan for the new acquisition proposes more than 1,400 lots and townhouse sites, two schools and a local town centre, a 10 hectare recreational park and an indoor community recreation facility.
It also sits opposite the future Clyde Regional Park, a planned 200 hectare parkland with sporting facilities and a water reserve.
“This announcement aligns with our strategy to restock our residential pipeline in well connected, desirable locations and allows us to drive near term FFO growth with strong risk-adjusted returns above our hurdle rates,” Stockland chief executive of communities, Andrew Whitson said.
He said the group is well positioned to extend its long term presence in Melbourne’s supply constrained south east, having delivered eight projects in the region over the past 15 years. The group has more than $2.7 billion invested in Victoria. Stockland will make payments over five years and the transaction structure is in line with expected restocking cash flows.
Whiston said the Melbourne market “continues to be underpinned by strong fundamentals”.
Stockland’s general manager of residential for Victoria, Mike Davis said that despite stage four restrictions in Melbourne, the group had seen strong demand and sales with recent launches Katalia in Donnybrook, and the Haven townhouse project in Altona North, with both selling out the first releases.
The developer recorded its highest quarterly home sales result in over three years during the September quarter, owing the result to pent up demand, low interest rates, more readily available credit and government stimulus measures.
Davis said the events of 2020 have seen a shift in customer preference towards affordable homes in lower density master planned communities with access to open space and local services.
“This acquisition allows us to continue leveraging our competitive advantage in the area, while bringing affordable new land to market quickly and increasing opportunities for first homebuyers and families to enter the property market.
“With our successful Edgebrook project due to trade out in early 2021, the timing of this acquisition will allow us to continue offering affordable, well connected and highly liveable homes in one of Melbourne’s most sought-after locations.” Davis said.
The latest research from Oliver Hume shows Victorians spent more than $250 million on new land developments in and around Melbourne during September, in the midst of the state’s COVID-19 stage four lockdown.
More than 850 new residential land lots were purchased at estates in the greater Melbourne region during September, higher than the same time last year.
September sales volumes were also significantly above the average of 650 sales per month for the whole of 2019.
Oliver Hume national head of research George Bougias said because land sales volumes had retreated from the extraordinary levels of June, the September result was a good outcome in the circumstances.
“Despite being deep in lockdown throughout September, buyers still found a way to secure their block of land and push ahead with the great Australian dream of homeownership,” he said. “It is another indication that buyers are increasingly confident about the future.”
“The last two years have seen both ups and downs as buyer sentiment ebbed and flowed rapidly on a host of external factors especially COVID-19.
“While there are no guarantees, we are looking forward to a return to more normal market conditions over the rest of 2020 and into 2021 as the health crisis wanes and the impact of government stimulus kicks in.”
According to the research, although volumes remained strong, prices moderated with the average gross sales price (conventional lots) of $311,000 falling 4.3% over the September quarter compared to the previous June quarter ($325,000) and 2.8% compared to the September quarter last year ($320,000).
Oliver Hume CEO Julian Coppini said the federal and state government incentives, such as the $25,000 HomeBuilder scheme have supported the market.
The Australian Bureau of Statistics data shows an expanded First Home Loan Deposit scheme as well as the relaxation of COVID-19 restrictions, helped drive a surge in dwelling approvals and construction loan and owner occupier commitments surged in September.
The data also showed that about half of the 25.3% rise in September’s owner occupier housing loan commitments was for the construction of new dwellings, while the value of total owner occupier loans rose 6.0% to $17.3 billion.
Coppini said it was time for the state government to step in.
“The development and construction industry will be critical to any recovery and we would expect the government to put the industry front and centre of its economic plan to get the Victorian economy back on track,” Coppini said. “The industry has done extremely well in adjusting to the lockdowns with a wave of innovation ensuring we are in a good position to drive the recovery.”
