Developer Mirvac today released its Q3 operational update and strategic review, which confessed that the company has been hurt by:
- paying too much for residential land;
- inappropriate deal structures;
- creating too much higher end product in shallow markets; and
- proceeding to build for reasons unrelated to market fundamentals.
Mirvac also revealed that 51% of its master-planned community projects are impaired with 31% of projects on the “urban edge” also impaired. By contrast, only 12% of Mirvac’s apartment projects are impaired while 20% of infill master-planned communities are impaired. (see next slide).
Meanwhile, Mirvac expects Australia’s residential markets to remain patchy, with Sydney and Western Australia likely to outperform, Queensland likely to remain soft in 2013 before picking-up over the medium-term, and Victoria’s market to underperform well into the future (see next slide).
Elsewhere, Australia’s biggest listed developer, Stockland, is expected to hand down its strategic review on Monday. Stockland has been hurt recently by the collapse in new home sales, especially in Melbourne’s growth corridors and across south-east Queensland. It will, therefore, be interesting to see whether the company makes further write-downs of its land bank or seeks further divestment.
