Property developer Mirvac has lifted annual profit and locked in record pre-sales on homes amid exuberant demand for housing in Sydney and Melbourne.
The company’s net profit rose 36 per cent to $610 million in the year to June, and expects booming markets will drive further earnings growth in its residential business over the next three to five years.
“In Sydney, momentum is continuing, supported by pent-up demand, strong population growth and an improving economy,” chief executive Susan Lloyd-Hurwitz said.
Mirvac has secured a record $2 billion in pre-sales for residential properties, up 67 per cent on the previous year.
More than 40 per cent of those are expected to settle in 2015/16, and the company is aiming for a 25 per cent increase in residential lot settlements in the year.
The company expressed concern about stricter lending standards for investors, saying it could hit people trying to get into the housing market through investing with higher costs, on top of soaring house prices.
While the regulatory crackdown on investor lending may slow price growth in the Sydney market, Mirvac said it does not expect that to have a significant impact on earnings.
“We’re overall optimistic about FY16, with less drag from falling resource prices, demand boosted by lower interest rates and a falling dollar,” Ms Lloyd-Hurwitz said.
“We continue to plan for a low interest rate environment and believe the economy would need to demonstrate a solid pick-up in the rate of jobs growth, more robust retail spending outside the south-eastern states and a rise in inflation before interest rates start to rise.”
The company said it has also turned around its retail property portfolio, which includes Sydney’s Harbourside and Birkenhead Point and Queensland’s Orion Springfield, increasing occupancy to over 99 per cent.
MIRVAC’S PROFIT SURGES ON HOUSING BOOM
- Full year profit up 36pct to $609.9m
- Revenue up 9pct to $2.15b
- Unfranked final dividend up 0.3 cents at 4.9 cents