The housing markets in the east coast capitals remain fundamentally undersupplied and new policies aimed at deterring foreign buyers have thus far had only minimal impact, according to Mirvac Group.
In the wake of warnings of a looming crunch, especially in the apartment market, Susan Lloyd-Hurwitz, CEO and managing director of Mirvac, said the continued growth in its residential business was well-supported by a high-quality pipeline.
“Buying at the right time and in the right locations has ensured we have strong embedded margins across a number of our residential development projects, particularly those in Sydney and Melbourne,” Lloyd-Hurwitz said. “We also expect to benefit from the substantial investment in infrastructure the NSW and Victorian governments are making, with a number of our residential projects located near proposed major transport lines.”
Mirvac’s residential building division reported a return on invested capital (ROIC) of 18%, exceeding the 2017 target of 15% even though a “small percentage” of international buyers had withdrawn from sales. International buyers now account for approximately 24% of Mirvac’s $2.7bn pre-sales pipeline, down from 26% a year ago.
Overall, Mirvac’s residential sales comprise domestic owner-occupiers (42%), domestic investors (34%), customers from mainland China (19%), and other offshore clients (5%).
Mirvac Group will continue to focus on apartments in Sydney, particularly those located near train stations. Last week, the group entered into a partnership with the Australian Turf Club (ATC) to develop surplus land next to the Canterbury Racecourse. In the Victorian capital, the group is focused on master-planned communities, such as its 162-home site at Tullamarine.
Mirvac is also promoting a “build-to-rent” scheme, a new housing model that guarantees residents long-term contracts, and is designed to ease the housing affordability crisis in some of Australia’s most expensive property markets.
“We are in this for the long haul; build-to-rent will only work with scale. And it’s going to take us some years to get there. We are absolutely convinced, from a customer point of view, that this is a product whose time has come,” she said.
Earlier this month, the group said it was preparing to launch Australia’s first major build-to-rent vehicle with the backing of major superannuation funds. Mirvac plans to build and hold units in capital cities supported by major superannuation funds with returns derived from rentals paid by residents.
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