Following of from yesterday’s claim by Australand that Prosper had exaggerated the extent of its residential land bank, Prosper has responded with the below media release, sourced from ASX company reports, providing an update of land banks held by Australia’s listed property developers:
Listed Developer Englobo Holdings
8 March 2013
Prosper Australia today issues its update of ‘Englobo’ holdings of listed property developers (attached), as revealed in their audited half year accounts recently released to the Australian Stock Exchange.
“Based on last year’s sales – the current pulse of activity – listed developers hold an average 20.4 years supply, up from 18.4 years a mere six months earlier,” David Collyer Campaign Manager Prosper Australia said today.
“Sharemarket-listed developers are a minority of developers. Their lot sales last year were around a tenth of building approvals, but unlike private developers their behavior is publicly visible – and instructive.
“Lend Lease holds a remarkable 33.7 years supply. Developer land holdings by time extend well beyond government planning time frames, the classic definition of ‘Landbanking’.”
This straightforward equation has been criticised by the industry as ‘simplistic’.
“The complexities of land development change nothing,” Collyer said. “This is their work-in-progress. It is a robust and valid measure.
“Withholding vacant land from use displaces activity and drives up land prices – to the great advantage of all existing landowners. While developers can rightly argue they are constrained by government planning controls, their complaints are like Brer Rabbit saying ‘Please don’t throw me in dat briar patch!’
“Developers have responded to the falls in sales volumes by further reducing the size of lots and offering non-cash incentives like new cars to maintain consumer ‘anchoring’ to peak prices. Previous land price downturns have been characterized by developer bankruptcies as banks made margin calls on this traditionally highly-geared industry.
“I note the relatively low borrowing by listed developers, likely secured on their income-producing commercial and industrial properties. They should withstand a major price correction, though shareholders equity will shrivel mightily.”
In the last half, Mirvac wrote down the value of their residential land holdings by $273.2 million and Stockland by $306 million, citing persistent weakness in the residential property market. PEET added 13,200 lots with an end value of around $2.3 billion to its stock while Stockland’s shrank.
“Land in Australia should be dirt cheap. Outstanding access to land ought be a national advantage, generously conferred by a loving government upon its people. And it could, with a decent Land Value Tax.”
Listed Developer Land Holdings December 2012
Lots Settled Lots in development Disclosed end value Av lot value Land bank Debt/ d+eq2 2012 Number $ billions $’000 Years per cent Australand 16121 20 370 8.0 330 12.6 38.9 Sunland 4033 3 110 1.3 418 7.6 4.9 AV Jennings 10 581 33.6 PEET 2 150 47 263 8.5 179 21.9 45.8 Mirvac 1 562 31 130 10.6 356 19.9 26.0 FKP 3194 4 525 1.45 309 14.2 37.5 Lend Lease 2 062 69 561 13.05 187 33.7 26.0 Stockland 5 264 81 270 22.76 279 15.4 33.1 Totals7 13 134 257 229 65.8 246 20.4 38.9 Source: ASX Company reports
1 For Australand, ‘Contracts on Hand’
2 Includes net deriviatives exposure to recognise finance charge
3 Lots settled in 6 months to end 2012, annualized
4Total lots and built sales, excl. Mulpha
5 At 30 June 2012
6At 30 June 2012 less $306m impairment
7Excludes AV JenningsListed Developer Land Holdings June 2012
Lots Settled Lots in development Disclosed end value Av lot value Land bank 11/12 Number $ billions $’000 Years Australand 1 108 21 300 8.0 531 19.2 Sunland 672 2 889 1.1 380 4.3 PEET 2 152 34 000 6.2 182 16.5 Mirvac 1 807 29 787 10.6 356 16.5 FKP 410 4 725 1.4 287 11.5 Lend Lease 2 059 68 006 13.0 191 33.0 Stockland 5 388 87 900 23.0 338 16.3 Totals 13 496 248 607 63.3 246 18.4 Source: ASX Company reports
Media comment: David Collyer 0413 248 193
About Prosper: Prosper Australia is a tax reform lobby group and think tank that is now 120 years old. It seeks to move the base of government revenues from taxing individuals and enterprise to capturing the economic rents of the natural endowment, notably through Land Value Tax and Mining Tax
Once again, for my own views on land banking, check out Why developers land bank. And for some possible solutions to the problem (in addition to tax reforms, such as introducing broad-based land value taxes), check out Look to Texas to solve Australian housing supply.
