This article is from the Australian Property Journal archive
A SLOWDOWN in residential activity has Mirvac’s lot sales more than halved, while extreme weather is impacting development timelines, but the diversified developer says medium-term market fundamentals remain solid.
Residential lot settlements in the September quarter totalled 354, down from 551 in the same period last year, while lot sales slumped from 902 to 415. However, pre-sales increased from $1.3 billion to $1.7 billion.
It retained its guidance for 2,500 lot settlements in FY23 and the expectation that the figure would be skewed towards the second half of the year.
“Across residential, sales activity has slowed from its peak 18 months ago, particularly in MPC, and weather is impacting our planned production timelines,” said outgoing Mirvac CEO and managing director Susan Lloyd-Hurwitz.
“Underlying medium-term fundamentals remain solid, with restricted future supply, an ongoing acceleration of overseas migration and a continued flight to quality led by owner occupier buyers.”
Mirvac is particularly positive about the apartments markets. It noted market vacancy across the east coast residential market has fallen to around 1.5% and new apartment starts are at lowest levels seen since 2012.
“With the recent increase of permanent migration caps, we are seeing an acceleration in population growth at the same time our pipeline is completing and market supply is restricted.”
During the quarter, Mirvac launched its Isle in Newstead achieving 40% pre-sales, and Fast-tracked construction commencement of Charlton House in Ascot Green following strong pre-sales of 50%.
Mirvac’s head of IIP, Campbell Hanan, said the build-to-rent sector, of which Mirvac is a leader in its early stages in Australia, is “very positive”, also supported by the forecast low supply of new apartments and the resumption of international students and immigration. Its LIV Indigo development in Sydney Olympic Park is 97% lease with 4.6% net effective rental growth on renewals, while pre-leasing as commenced at its development next to Melbourne’s Queen Victoria Market.
Its office portfolio saw occupancy lift over the quarter from 95.7% to 96.3%, with a weighted average lease expiry (WALE) of 6.2 years. It secured leases of 13,700 sqm.
Mirvac sold Allendale Square in Perth for $223 million and 189 Grey Street in Brisbane for $104.4 million, both “at around book value”, while it commenced the marketing sales process for 60 Margaret Street and the MetCentre in Sydney, and 367 Collins Street in Melbourne.
Mirvac’s industrial portfolio is totally occupied with a WALE of 6.5 years, and it has a $1.1 billion development underway and is exploring opportunities to introduce capital partners, according to Hanan.
Across the retail portfolio, footfall remains below COVID levels but moving annual turnover portfolio sales grew 2.7% on 2019 levels, and 12.6% on last year during the Sydney and Melbourne lockdowns. There were 90 leasing deals completed with a -1.9% gross leasing spread.
