This article is from the Australian Property Journal archive
STOCKLAND has splurged $250 million in some last-minute Christmas shopping along the east coast, restocking its residential pipeline and adding to its industrial and logistics portfolio.
In Queensland’s Ripley Valley, Stockland spent $193 million acquiring the active, trading 700-hectare masterplanned residential community known as Providence.
More than 1,500 residential lots, two schools, sporting facilities, a café, and sales and community centre have already been delivered, and a further 6,000 additional new homes are included in the master plan.
Located 43 kilometres south west of the Brisbane CBD and 12 kilometres west of the greater Springfield CBD, Providence is earmarked to be home to 20,000 people over the next 20 years and include an education precinct, sporting grounds, a town centre and extensive transport connections.
The acquisition will include progress payments over a six year period, with the final payment of approximately $160 million to be made in December of 2026 in line with expected funds employed.
“We expect the record-low interest rates to continue to underpin the residential market over the medium term, and this acquisition aligns with our strategy to restock our development pipeline with well located, market-ready projects in areas with strong demand fundamentals and expected total returns above our hurdle rates,” Stockland chief executive officer of communities, Andrew Whitson said.
“With government stimulus, the post-COVID shift in customer preference towards detached homes in masterplanned communities, and strong interstate migration driving the south east Queensland residential land market, acquiring this active project will enable us to immediately benefit from the positive market conditions.”
Stockland has more than $2.8 billion invested in Queensland, with three other active residential projects in the Brisbane’s greater western corridor. The Ripley Valley has accounted for more than 40% of land sales within the region in recent years.
“The Queensland housing market has performed very well over the past six months,” Stockland’s general manager of residential for Queensland, David Laner said, adding that strong demand and sales success had been seen at nearby projects Augustine Heights, Kalina and Sovereign Pocket.
“This acquisition will help us bring more new land to market and continue to offer affordable, well connected homes in one of south east Queensland’s biggest growth areas, increasing opportunities for first homebuyers and families to enter the property market.”
Last month, Stockland added to its residential pipeline with the $180 million acquisition of a 131 hectare land parcel in Melbourne’s growing south east corridor. Earlier in the year it acquired the undeveloped portion of the $4 billion north west Sydney masterplanned community The Gables for $415 million.
The group has been reshaping its portfolio, and has just offloaded four Victorian retirement villages for $89 million as it shifts further away from the sector – that portfolio sold at a 10% discount to book value.
Industrial play
Meanwhile, Stockland has entered into a fund-through agreement to acquire a 6.3 hectare industrial development site across two lots in Melbourne’s western suburb of Truganina for about $60 million, taking its workplace and logistics development pipeline to $5.5 billion.
The agreement will see Stockland work with Time & Place and MaxCap Industrial Opportunity Fund to develop 38,550 sqm of warehousing across two buildings at 151 Leakes Rd.
“We have a clear goal to continue strengthening our commercial property portfolio and improving risk adjusted returns through improved income growth and valuation resilience, by executing our $5.5 billion workplace and logistics development pipeline and new acquisitions in Melbourne, Sydney and Brisbane,” Stockland commercial property CEO, Louise Mason said.
“We expect the logistics sector to prove resilient to the impacts of COVID-19 relative to other sectors, and foresee favourable market fundamentals continuing in the longer term.”
The property is approximately 18 kilometres from the Melbourne CBD and 14 kilometres from the Port of Melbourne, and benefits from easy access to the Princes Fwy and future West Gate Tunnel, due for completion 2023, with direct access to the Port of Melbourne.
Stockland general manager of workplace and logistics, Tony D’Addona, said Melbourne’s western industrial precinct has an undersupply of zoned and serviced land, and with strong domestic institutional investor demand, values are increasing and yields compressing.
“We expect logistics demand to continue to grow along the eastern seaboard as supply chains are reviewed in the aftermath of COVID-19, and the associated rise in online retail.”
Settlement is expected in July of 2021, and is conditional on subdivision, registration of the subdivision plan and titles issuing. Construction will commence immediately following settlement and depending on approvals, is completion is targeted by April of 2022.
