This article is from the Australian Property Journal archive
PROPERTY developer Cedar Woods have reported weaker sales than usual in the first quarter of the financial year.
The company holds a solid balance sheet with moderate debt and over $60 million in undrawn finance facilities and cash at bank at quarter end – available to fund operations and committed acquisitions. Cedar Woods are also up 12% in presales, with the value of presale contracts reaching $514 million, up from the $460 million this time last year.
There has been a period of weaker sales than usual as a result from the hike in interest rates and low consumer sentiment. Year-to-date gross sales are down 44% on the strong prior corresponding period (Q1 FY22). The balance from the presales however, is set to help contribute towards Cedar Wood’s earnings in the 2024 and 2025 financial year. Growth in earnings for the 2023 financial year will be dependent on market and construction sector conditions.
Cedar Woods have also overseen some impressive projects with Boston Commons in Melbourne set to begin construction in the next few months. Construction has also commenced on the planned community Eglinton Village 45km north-west of Perth’s CBD. The company was also up in lights when their established master-planned community in WA, named The Rivergums was given the Judges’ Award at the 2022 UDIA WA Awards.
The company is in a good spot generally, however their future outlook is all based off the current climate of the market and construction sector. The completion of some projects that may be targeted for the fourth quarter of the 2023 financial year may be pushed back to the first quarter of 2024 which would also delay any possible revenue.
Cedar Woods’ managing director Nathan Blackburne said that things will improve for the company.
“Favourable selling conditions are expected to return in the medium-term with strong employment, very low rental vacancy rates and inbound migration recovering, so the medium-term outlook for our business is positive.”
The company believes that they’re in a good position with new supply, low vacancy rates and increasing net overseas migration set to increase demand and mitigate the impact of rising interest rates on new residential property prices. The likes of Adelaide, Perth and Brisbane have seen an increase in sales values and volumes in FY24.
Further according to their operational update, the high quality and infill nature of many of the company’s projects are expected to outperform the general market, noting that infill projects traditionally have limited competition, experience more consistent demand and superior price growth when compared to urban fringe developments.
