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Research analyst PIR is advising clients to sell their holdings of Australian real estate investment trusts after prices for the companies rallied and many in the sector performed well in the latest reporting season.
Listed Australian property companies <a href="/expert-insights/investing/reits-deliver-strong-results-in-february-reporting-season">delivered strong results in the latest reporting season</a>. The S&amp;P/ASX 200 A-REIT index, which tracks stocks in the sector, gained 30% over the year to the end of February compared with a rise of 10% for the broader S&amp;P/ASX 200 index.
“The A-REIT sector has rallied hard, and the listed market is pricing in strong earnings growth, strong NTA [net tangible asset] growth, or (the simplest and most probable explanation, given the rally in other “yield” stocks such as banks) very low interest rates,” PIR analysts noted.
“The risk is that the market may rotate out of yield stocks, prompting a sell-off in REITs. Take profits now and re-enter at a better level,” they advised.
REITs are considered to be yield stocks because they typically pay stable streams dividends to shareholders from rent collected on properties.
Charter Hall Retail REIT, which reported its half-year results on 19 February, paid out 13.7 cents per share on earnings of 14.87 cents a share for the first half. It forecast it would achieve full-year operating earnings per share of 29.6 to 30 cents, of which 90% to 95% would be paid to investors.
PIR recommended clients reduce their holdings of Charter Hall Retail REIT, commenting that at $4.53 at the time of the report, the stock was “getting pricey”.
Other analysts have different views on the stock and the REIT sector more generally. According to opinions tracked on Yahoo Finance, one analyst says sell Charter Hall Retail REIT and seven expect it to underperform but four recommend holding.
Commentators, including Atchison Consultants analyst Ming Niu, <a href="/expert-insights/investing/will-areits-remain-attractive-once-interest-rates-start-to-rise-ming-niu">believes REITs will continue their strong performance</a>, perhaps with marginal price falls. 
PIR analysts are also recommending clients reduce their holdings of Arena REIT, which invests in social infrastructure sectors such as childcare, healthcare, education and government tenanted facilities. Arena said in its half-year results that it would deliver distributions of 10 cents per share for the full financial year.
PIR’s recommendation stands apart from other analysts’ assessments with two of those whose opinions are listed on Yahoo Finance saying hold and one saying buy.
Folkestone Education Trust is another stock PIR is recommending clients reduce. The company trades on a forecast price earnings ratio of above 17 times, against a P/E ratio of 15.7 times for the wider sector. The analysts noted the stock is trading at a premium of about 30% to its NTA and its distribution per share yield is about 6%.
“The listed market is pricing in strong earnings growth, strong NTA growth and yield compression, or – more likely, given the rally in other “yield” stocks such as banks – very low interest rates,” the analysts noted.
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It's time to sell REITs: Research analyst

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Mortgage volumes increased around the country in February, particularly in South Australia, suggesting that state’s property market is recovering after a sluggish few years.
Mortgages processed in South Australia by Australia’s largest mortgage broker, AFG, increased by 31% in February compared with the same month in 2014.
Around the country mortgage volumes were up 16% compared with the same time last year and up 58% compared with January, the broker reported.
“February is the real start to the mortgage year and overall we’re off to a flying start this year,” AFG general manager of sales and operations Mark Hewitt said.
“No doubt the February rate cut has made borrowers more confident, but it’s important to recognise the significant variations from one state to another.”
Mortgage volumes processed by AFG in February were up in NSW by 25%, in Victoria by 21% and in Queensland by 15%. The broker processed 4% fewer mortgages in Western Australia compared with the volume processed in February 2014.
The Australian Bureau of Statistics will release official home finance figures for January on 11 March.
South Australia’s strong growth in mortgage applications follows a pick-up in the state’s property market in the December quarter of 2014, as highlighted in an analysis by the Real Estate Institute of South Australia.
The Valuer General’s median house price in Adelaide hit $425,000, while the state median price was $390,000, REISA reported.
REISA president Greg Moulton said the latest figures showed a 3.16% increase in the state’s median property price over the September quarter and a 3.91% increase in median price compared with the same period of 2013.
“The change in median price over the last few quarters is fantastic and shows quite clearly the underlying strength of the property market,” Moulton said. 
“The other great figures are that the volume of sales increased for both South Australia and metropolitan Adelaide in 2014 compared to 2013. There was an increase of 2.63% in volume of sales across South Australia and 2.4% across metropolitan Adelaide,” Moulton said. 
However, South Australia’s market still faces headwinds. The capital gains and sales volumes it has posted are considerably lower than those in the Sydney and Melbourne markets where homes appreciated in value by 12.4% and 7.6% respectively through 2014, according to Corelogic/RP Data.
Property valuation and advisory group Herron Todd White noted in its March review that: “Adelaideans are traditionally very conservative and local economic factors, cost of living expenses and job security at this time is playing a significant role in holding back [Adelaide’s] market.”
Herron Todd White did not expect the interest rate cut to have much of an effect on Adelaide’s property market, although it noted investors may be spurred into action by the expectation of a further 25 percentage point rate cut.
“The feeling was that increasing investor activity during 2014 has played a significant hand in the steady ongoing recovery of [Adelaide’s] housing market,” the review noted.
It added: “Generally Adelaide investors are most active in the sub $500,000 segment and we believe that sales activity in this price bracket may improve during 2015 and as a direct result there may be a slight improvement above what is expected in capital growth. However at this stage we don’t believe that it will be significant … We believe that overall during 2015 our market will continue on its path of steady recovery and translate to between 3% and 5% in capital gain for the calendar year.”
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Mortgage volume increase points to South Australian recovery

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Real estate investment seminars are in the spotlight again with the competition watchdog instituting proceedings against property training company We Buy Houses and best-selling author Rick Otton.
The Australian Competition and Consumer Commission (ACCC) has repeatedly warned consumers to be cautious about real estate investment seminars in general. It urges people who have been scammed or come into contact with a seminar or real estate investment that “doesn’t seem right” to report it to the ACCC through the <a href="https://www.scamwatch.gov.au/content/index.phtml/tag/InvestmentSeminarsRealEstateScams" target="_blank">SCAMwatch website</a>.
In the latest case, <a href="/news/accc-drags-rick-otton-to-court-for-his-buy-a-house-for-1-claims">the ACCC alleges </a>We Buy Houses and Otton contravened the Australian Consumer Law by making misleading claims in promoting property investment seminars and training programs at costs ranging from $2997 to about $17,000.
Otton, who wrote the popular book How to Buy a House for a Dollar, says the ACCC is taking a literal interpretation of the book’s title while members of the public would understand that the dollar was just the start of the process.
But the ACCC is concerned the seminars target vulnerable consumers who don’t qualify for bank loans or who are having difficulties meeting their mortgage repayments.
The latest action follows an investigation with New South Wales Fair Trading. We Buy Houses and Otton have <a href="https://www.theage.com.au/victoria/warning-on-risky-we-buy-houses-scheme-20121102-28ofe" target="_blank">previously been under scrutiny</a> in other states with Victorian consumers warned about the seminars in 2012 and Otton being <a href="/news/wa/best-selling-property-investment-authors-wa-seminars-banned-department-of-commerce">banned from conducting seminars in Western Australia</a> in 2013. 
The ACCC frequently warns would-be investors that many consumers have paid thousands of dollars to a wide range of property investment seminar promoters to receive advice. In many cases the strategies presented have been high-risk, involving borrowing excessive sums or borrowing on risky terms, and inappropriate for the investor.
In some instances, people with <a href="/guides/asic-commences-proceedings-against-property-promoter-park-trent-properties">self-managed superannuation funds have been specifically targeted</a>, although<a href="https://fsi.gov.au/publications/final-report/chapter-1/direct-borrowing" target="_blank"> proposals to ban SMSFs from borrowing</a> may curb that. 
Some investment seminar promoters use high pressure tactics to coerce people into making investments without independent advice. Some charge unexpected fees and commissions or make false or misleading promises about rent guarantees or discounts for buying off the plan.
Here’s a list of tips compiled from the <a href="https://www.scamwatch.gov.au/content/index.phtml/tag/investmentseminarsrealestatescams" target="_blank">ACCC’s ScamWatch website</a> and the Australian Securities and Investments Commission’s (ASIC) <a href="https://www.moneysmart.gov.au/investing/investment-warnings/investment-seminars" target="_blank">MoneySmart website</a> on how consumers can protect themselves from losing money as a result of advice from a property investment seminar:
<ul>
<li>Use your common sense: the offer may be a scam. 
</li>
<li>Remember there are no get-rich-quick schemes: the only people who make money are the scammers. 
</li>
<li>Be wary of investments promising a high return with little or no risk. No investment is risk-free. If it looks too good to be true—it probably is. 
</li>
<li>Look carefully at the strategies suggested by the seminar to achieve these results. Property typically returns 6-7% a year, year after year. If you're offered returns of 1-2% more than the typically return, get a second opinion and ask for a detailed written explanation. 
</li>
<li>Watch out for property deals that include 'rent guarantees' or 'discounts' for buying off the plan. They can involve hidden fees and commissions. The properties can also be over-valued. 
</li>
<li>If you are planning to make an investment, consider other costs that may be involved such as legal fees and stamp duty. 
</li>
<li>Do not let anyone pressure you into making decisions about money or investments. Do not commit to any investment at a seminar where the atmosphere can be charged and exciting. Investment decisions should only be made after a lot of thinking and after seeking independent advice. 
</li>
<li>Remember that family members and friends may try to involve you in a scam without realising that it is a scam: you should seek independent advice (from a lawyer or financial adviser). 
</li>
<li>Do not open suspicious or unsolicited emails (spam): delete them. Do not reply to a spam email even to unsubscribe. 
</li>
<li>Check with ASIC and the ACCC to see if they have taken any action against seminar promoters or their schemes. Remember that even if ASIC or the ACCC have not taken any action to date, this does not mean the scheme is safe or legal. 
</li>
<li>Before you accept an offer to fly interstate to view properties, find out if you must pay for your travel and accommodation if you don’t buy. 
</li>
<li>Another twist is to get you to invest in offshore schemes where you lose the protection of Australian laws. You may never see your money again.</li>
</ul>
Source: ACCC, ASIC.
 
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11 tips to protect yourself from a property investment scammer

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Australian listed property companies with a focus on commercial property delivered solid results in the February reporting season while corporate activity and property transactions were high on the agenda.
Property companies have outperformed the broader share market. The S&amp;P/ASX 200 A-REIT index, which tracks Australian listed real estate investment trusts, is up 30% over the year to the end of February compared with 10% for the ASX 200 index.
Companies with exposure to retail property performed well in the latest reporting season as sales growth and asset revaluations lifted profits.
While not specifically a property company, homeware giant Harvey Norman has a sizeable holding of retail property. It said improving consumer confidence and growth in equity and housing markets benefited its results while its own property assets increased in value.
The company reported a first-half net profit of $142 million, up 27.4%. Sales revenue increased 8% to $839.3 million, while the value of its property assets rose to $2.31 billion from $2.27 billion.
Fellow retailer Wesfarmers reported that Coles’ revenue increased 2.8%, while homewares sales, including Bunnings, were up 11.8%. Sales from Woolworths’ home improvements business were also up, although overall the grocery giant reported weaker sales results.
Declining sales growth for Woolworths is a risk for listed property companies such as SCA Property Group, Charter Hall Retail REIT and Federation Property, which own mostly neighbourhood and smaller shopping centres with those retailers as anchor tenants. However, each of those groups reported solid results and increasing property values.
Gains in asset values was a common theme for retail-focused Australian real estate investment trusts. There was also a large number of shopping centre sales through the period with commercial property agent Savills reporting $5.7 billion worth of retail property changed hands in 2014, down from $7.4 billion in 2013, but up compared with the five-year average.
Corporate activity was also a feature of the most recent reporting season.
Novion Property Group is in merger talks with Federation Property while Scentre Group formed in mid-2014 out of the restructure of the Westfield Group. All three companies reported higher asset valuations and positive results.
Westfield Corporation, which also formed out of Westfield Group and invests in shopping centres in the US and UK, reported half-year profit increased 20% to US$582.3 million.
“Retail has performed strongly in recent years, but rental growth is expected to moderate going forward because of pressures of sales leakage to online retailers, consumer deleveraging and declining sales productivity,” Morningstar analysts said.
Industrial property is seen as one of the beneficiaries of increasing online sales as warehouse and logistics-focused property gains importance. There has been strong growth in investor demand for industrial properties over the past 12 months, particularly top quality properties, CBRE’s 2014 Q4 Industrial MarketView report showed.
Investor demand for office property has also been strong although tenant demand, particularly in Perth and Brisbane has been weaker as a result of the downturn in mining investment. 
In total $24 billion worth of commercial property transacted in 2014, Savills’ research shows.
Growthpoint Properties Australia, which invests in office and industrial property, noted in its interim report that there has been a “disconnect between weaker occupier demand and high investment demand” for Australian commercial property over the past two years.
“This appears to be the result of mixed economic conditions coupled with historically low interest rates and bond yields” Growthpoint noted.
“In the office sector, weak occupier demand has resulted in high levels of vacancies and incentirves across Australia. Within the industrial market, occupier demand was patchy over 2014 with the gross take-up being substantially below the 10 year average and at its lowest level since 2009.
“Office market leasing conditions are expected to remain difficult in 2015 … Moderate occupier demand for industrial space is being experienced. Competition for well leased office and industrial properties will continue as the demand for investment outweighs the supply of property coming to market for sale with the strong demand from offshore investors, as well as domestic institutional and A-REIT investors expected.”
Growthpoint reported half-year profit up 123.4% from the previous corresponding period to $141.8 million. Its properties were revalued 4.5% higher in the first half.
Analysts at CLSA reportedly expect B-grade office, industrial and regional retail asset classes to outperform in 2015, and anticipate further mergers and acquisitions from the likes of Mirvac, Cromwell, Dexus, GPT and Charter Hall. They believe stocks in the sector are expensive but estimate an 11% return in 2015 if bond rates stay low.  
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REITs deliver strong results in February reporting season

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Low interest rates can benefit property investors as much as home owners. 
Investors often opt for fixed rate interest-only mortgages to maintain control of their outgoings and as such may miss out on the rate reductions. But those who have variable mortgages and investors who are taking out a loan for a new purchase or refinancing an existing property will find their costs are lower – and therefore their returns greater – than they would have been when rates were higher.
Australia’s already record low interest rate was cut again in February to 2.25% and many commentators are predicting a further cut in March. Financial markets had better-than-even odds on a rate cut to 2% at the end of February less than a week before the March announcement.
As at the end of February, 30 lenders had followed the Reserve Bank of Australia’s lead and cut their mortgage rates, according to Finder.com.au. The comparison website estimates that by March there will be 158 variable home loans with rates under 4.6%.
RateCity.com.au lists variable rate investment loans from Beyond Bank with a comparison rate of 4.35%, from Bank Mecu with a comparison rate of 4.39% plus a $595 application fee and from IMB with a rate of 4.48%. However, there are other variable investment mortgages that charge above 5.8%. 
Paying 1.5% more interest on your mortgage makes a huge difference to the bottom line of your investment. 
Monthly interest-only repayments on a 30-year $350,000 investment loan charging a 4.35% are $1268.75, according to Aussie Home Loans’ calculator. That’s $456,750 over the term of the loan. 
At a 5.85% interest rate, the same sized mortgage would cost $1706.25 a month, or $614,250 over the 30-year term.
That’s a massive $437.50 a month and $157,500 over 30 years.
To put that further into perspective, to increase the income from the property by $5250 a year – the equivalent of the monthly interest saved by having a 4.35% mortgage compared with a 5.85% mortgage – the investor would have to lift the rent by more than $100 a week.
The sums above also ignore tax. Investors have to pay tax on rental income, whereas interest expenses on a mortgage are tax deductible. 
After tax, a $100 increase in rent per week would equate to around $70 a week before deductions and offsets, depending on the investor’s marginal tax rate. Lower amounts of interest paid on a mortgage reduce the value of tax deductions.
While many investors may be locked in to a fixed-rate loan, for those with the flexibility to move, looking for a lower rate mortgage can lift the returns on an investment.
Just as owner-occupiers, investors should consider what’s right in their own situation. Investment loans may charge fees or come with restrictions. The Homeloan HQ investment refinance loan, with a comparison rate of 4.46% is only available up to maximum loan-to-value ratio of 70%, for example. Other investment loans are available for LVRs up to 97%.
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Low interest rates can benefit property investors as much as home owners

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The profile of private rental tenants in Australia has changed dramatically over the past 30 years, with an increasing number of families with children and older people renting for the long-term, an academic study has found.
The research by the Australian Housing and Urban Research Institute (AHURI) at Swinburne University of Technology is being used to inform government policy, but private landlords may find it useful when deciding what type of property to buy or how to renovate.
The absolute number of households in the private rental market doubled to 1.8 million over the past 30 years with the biggest growth in Queensland and the ACT, according to a bulletin based on the research released in February.
Families with children represented more than 40% of renting households in 2011, a much higher proportion than in earlier decades, the bulletin noted.
The number of group households has also risen, with more than one in 10 private properties being rented by unrelated housemates in 2011, up from just over one in 25 in 1981.
Traditionally, single tenants and young families made up the largest proportion of renters. But rentals to lone person households fell to one quarter in 2011 from just over 40% in 1981.
Renting households are also getting older. More than half of renters were over 35 years of age in 2011 compared with around 40% in 1981, the bulletin reported.
“While the age profile of households in private rental housing remains young relative to all households, the median age of household heads is growing more rapidly than for households in general. This is likely to lead to the private rental sector being home to larger proportions of elderly households in the future,” the bulletin noted.
For investors, the findings suggest properties that would suit families with children, or appeal to older people will be the ones most in demand, perhaps increasingly so in future.
But be careful not to limit the range of potential tenants that a rental property will appeal to.
A location near to shops, schools and transport, as well as cafes and restaurants will be attractive to a broad range of tenants.
Features such as a second bathroom, parking or a lock-up garage, an internal laundry and a good-quality, functional kitchen will also have wide appeal.
Apartments v houses
High density housing and apartments are popular investment choice for many landlords as they tend to be cost less and offer higher yield, and maintenance is often managed by a strata company, which makes them less work for owners.
However, the AHURI research shows the proportion of private renters in apartments and high density dwellings fell to 44.8% in 2011 from 48.9% in 1981. That is in spite of a 400% increase in the number of private rentals that were apartments and a 79% increase in rental properties that were in high density housing.
By number, 80% of all growth in private rental housing has been in detached and semi-detached properties mostly in the suburbs, the research bulletin noted.
The advantages for investors in buying a house rather than a unit are that the additional land offers an opportunity for capital growth, while there’s a better chance of attracting some tenant types, such as families to rent a freestanding home with extra space for children.
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Average tenant becoming more likely to be older and have families

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Stamp duty on property conveyancing, insurance and motor vehicle sales should be scrapped and the goods and services tax (GST) lifted to make up any funding shortfall, accounting professional body CPA Australia has proposed.
<a href="/expert-insights/finance/how-stamp-duty-varies-state-by-state">Pressure has been mounting for changes to stamp duty</a>, which is charged when properties change hands, with representatives from various state branches of the Real Estate Institute, the Property Council of Australia and other industry commentators calling for the tax to be reviewed.
CPA Australia chief executive Alex Malley described stamp duty and taxes on property conveyancing, which often run to tens of thousands of dollars, as “inefficient and unpopular”.
He said modifications to the GST could raise enough revenue to allow government to eliminate the charges.
“Additional GST revenue can be used to abolish a number of inefficient state taxes and also provide for personal income tax cuts and compensation for low income households, while also boosting economic growth,” Malley said.
The accounting body commissioned KPMG to prepare a report comparing four scenarios involving changes to the base and rate of the GST, along with the removal of stamp duties.
Under the existing system, a 10% GST is applied to a wide range of products and services in Australia. Food, health and education are excluded.
One scenario looked at maintaining the level of the GST but extending it to include food, health and education. The report estimated an additional $12.1 billion could be raised in the first year through this course of action.
Another scenario examined retaining current exemptions while increasing the GST to 15%. This would raise an extra $26 billion, the report estimated.
A third case considered lifting the GST and extending it to cover health and education but not fresh food, which was reckoned to bring in $36.8 billion in extra revenue.
The final scenario involved increasing the GST to 15% and broadening its reach to include food, health and education. The modelling found this would raise $42.9 billion additional revenue.
“The additional revenue raised in each of the scenarios can be used to retire or reduce inefficient and unpopular taxes, including stamp duties on insurance, motor vehicles and conveyancing on residential and commercial properties,” Malley said.
“The modelling reveals that there is also sufficient revenue to return to households as income tax cuts or as compensation for low income households who would not benefit from changes in income taxes.
“The net outcome in all the reform scenarios we’ve looked at is that households across the income spectrum can be better off.”
Previous reviews of the taxation system have excluded the GST, which was introduced by the Howard government in 2000, more than 20 years after a consumption-based tax was first proposed for Australia.
{mijopolls 92}
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Raise the GST to abolish stamp duty: Accountancy group

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More than half a million Australian households were the victims of malicious property damage, while another 400,000 suffered a break-in or attempted break-in at their home in the 2013-14 financial year, a survey published last week has found.
Malicious damage was the most common property crime, with 6% of the 8.8 million households surveyed by the Australian Bureau of Statistics claiming to have suffered at least one incident during the year.
That rate was 10 times higher than the proportion who experienced a motor vehicle theft and double the proportion who said items had been stolen from their vehicle.
Only half of households that experienced malicious property damage reported the incident to police, the ABS survey found. Three quarters reported a break-in but only 43% reported an attempted break-in.
Despite the risk of theft and damage to home and contents, four out of five Australians has inadequate property insurance and one in four has no contents insurance cover at all, according to a separate survey by Quantum Market Research for the Insurance Council of Australia.
Some people said the cost of insurance was too high while others were complacent about the need for coverage.
For landlords, insurance premiums can be claimed as a tax deduction. The scope of <a href="/expert-insights/investing/what-is-landlords-insurance-investment-terms-explained">landlord insurance</a> varies between policies, but most include coverage against malicious damage to the building and its contents by tenants and their guests, as well as intruders.
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Malicious damage the most common property crime

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Prices for residential property in Australia’s major capitals will continue to rise but at a slower pace than in previous years and there will be variation across different parts of the cities, the head of Mirvac has forecast.
Demand for housing is outstripping supply in many locations, while low interest rates are continuing to support residential markets and housing finance is up in all major states, Mirvac chief executive Susan Lloyd-Hurwitz said at the company’s half-year results briefing.
“We expect housing credit to continue to grow,” Lloyd-Hurwitz said.
The value of dwelling finance commitments excluding alterations and additions rose 4.7% from November 2014 to December in seasonally adjusted terms, the latest Australian Bureau of Statistics (ABS) data shows.
Building approvals increased by 8.8% in seasonally adjusted terms in the December quarter of 2014 compared with the same quarter of 2013, according to ABS figures.
“Sydney in particular is supported by entrenched undersupply,” Lloyd-Hurwitz said. “Over the next 20 years an additional 1.6 million people will live in Sydney and to accommodate that population growth the market needs to supply over 33,000 new dwellings per annum and that’s a level [of construction] that has never before been sustained.”
All major states had experienced strong population growth, although this has slowed in Queensland and Western Australia.
Demand for housing coupled with limited supply is expected to drive property prices higher.
Mirvac expects modern, higher density dwellings with access to infrastructure and amenities to be most in demand, particularly in the south eastern states. The company secured nine new residential projects in the first half of the 2015 financial year with most of the lots in NSW.
Overall, the company’s residential portfolio is dominated by properties in Sydney and Melbourne, with more than half apartments.
“While overall vacancy rates are low across all capital cities there are pockets of oversupply which requires us to be very disciplined about which submarkets we pursue,” Lloyd-Hurwitz added.
Mirvac has walked away from residential development opportunities when the risks were too high or the rewards too low, she said.
The company reported a $279 million profit attributable to security holders for the first half of the 2015 financial year, up 13.4% compared with the previous first half. Operating profit after tax increased to $231.2 million, up 15.5% compared with the half to December 2013.
It has forecast full year earnings per security will be between 12.2 and 12.3 cents, and distributions will be 9.2 to 9.4 cents per security.
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Mirvac expects slowing in price growth

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Residential property prices along the eastern seaboard will continue to grow for the next few years supported by strong population and employment growth, low interest rates and an undersupply in many housing sub-markets, Stockland Property Group chief executive Mark Steinert has predicted.
Stockland reported a 55.1% increase in statutory profit for the first half of 2015 compared with the prior corresponding period. The huge increase was largely due to revaluations of its commercial property assets, but underlying profit was also up by 8.5%, driven by a 73% improvement in its residential business.
“Growth [in the residential business] came not only from supportive market conditions but more particularly from launching new projects, activating our land bank and also improvements in [sales] volume, in particular in Victoria and Queensland,” Steinert said in announcing the half year result.
The company sold 22% more residential lots in the first half of 2015 than during the same period of 2014. It has entered the second half of the financial year with a record 3700 contracts on hand, up 550 compared with the previous six months.
“The Western Australian market is slowing – we’ve been talking about that for well over a year – but overall we expect, particularly on the eastern seaboard, an elongated residential cycle that will continue to show reasonable levels of growth for the next couple of years,” Steinart said,
Stockland’s residential division specialises in producing affordable low and medium density homes. More than 45% of its residential properties are sold to first home buyers.
The company plans to continue to boost profits in its residential division by developing more of its land reserves and buying additional development land adjoining or close to its successful projects to take advantage of brand awareness in the local markets.
Residential property makes up around 20% of Stockland’s business. Steinert said its other divisions had also performed well.
Underlying profit from the retail business was up 3.3%, logistics and business parks was up 5.7%, and office was up 7.8%. The retirement living business reported a 5.8% increase in operating profit.
The company tighten its guidance range from 6.5 to 7% earnings per security growth to 6.75 to 7% EPS growth for the full year. It forecast distributions would be maintained at 24c, assuming conditions remained reasonable. 
DISCLAIMER: Zoe Fielding owns shares in Stockland.
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Western Australian housing price growth slowing: Stockland results 

Developers and apartment buyers have a narrowing window of opportunity before Brisbane's Olympic infrastructure pipeline begins competing directly with residential construction, pushing up costs, tightening labour supply and making new projects increasingly difficult to deliver.

While Brisbane's apartment market continues to benefit from strong population growth and limited housing supply, industry research suggests the years leading up to 2027 could prove to be the most important period for developers looking to secure builders and buyers hoping to purchase before the next wave of price increases.

A new Colliers report, Brisbane 2032 Olympic and Paralympic Games: Creating Solutions, highlights the scale of the challenge. While thousands of new homes are planned across South East Queensland, the Brisbane Olympic Athletes Village alone will deliver more than 10,500 beds during the Games before being converted into around 1,750 to 2,000 apartments. Equivalent to almost two years of typical inner-city apartment supply, the project will also absorb a significant share of the construction workforce and building materials.

The broader construction pipeline paints an even clearer picture.

Construction Skills Queensland's Horizon 2032 report forecasts Queensland's annual construction pipeline will average $69 billion over the coming years before peaking at $75 billion in 2027-28. Demand for construction workers is expected to increase by 17 per cent to almost 150,000 people, with the industry facing an annual shortfall of around 19,000 workers that could blow out to as many as 35,000 during the peak construction period.

The Olympic venues, athletes village and supporting infrastructure will account for billions of dollars worth of work across South East Queensland through to 2032, creating intense competition for labour at a time when Australia's residential construction sector is already under pressure.

[smartcode_project:default project_id=150489 project_image_fid=373834]

Colliers Queensland Residential Director Andrew Scriven said the convergence of these projects is creating a clear window of opportunity for both developers and buyers.

"From 2027 onwards, the market will shift dramatically," Scriven said.

"Labour will increasingly be locked into government-led infrastructure and Olympic projects, which means private residential developments will face higher costs and tighter margins. The developers who move now are the ones most likely to get projects off the ground."

Scriven said the same dynamic would also affect buyers, with fewer apartment projects expected to launch once construction capacity tightens.

"If you're looking to change your lifestyle over the next five years, now is your window of opportunity to buy."

[smartcode_project:default project_id=150713 project_image_fid=373827]

Developers are already positioning themselves ahead of that window.

Following the success of Monarch at Toowong, Consolidated Properties is preparing to launch two new Brisbane apartment projects in the second half of 2026. They include <a href="https://www.apartments.com.au/new-apartments/gloriette-30-bedivere-street-yeerongpilly-qld-4105">Gloriette</a> at Yeerongpilly Green, a 25-storey tower within one of Brisbane's key Olympic precincts, and <a href="https://www.apartments.com.au/new-apartments/castile-47-skyring-terrace-newstead-qld-4006">Castile</a>, a recently approved 25-storey riverfront development at 47 Skyring Terrace in Newstead.

Hutchinson Builders will deliver both projects, with early works already underway at Yeerongpilly and Newstead expected to commence later this year.

The timing comes as Brisbane's fundamentals continue to strengthen, with strong interstate migration, population growth and vacancy rates remaining below 1.5 per cent.

Colliers Queensland researcher Pragya Sharma said Greater Brisbane is forecast to require around 40,000 new apartments between 2021 and 2031.

"There's a real mismatch emerging between when housing is needed and when it will be feasible to build," Sharma said.

"As a result, the period leading up to 2027 presents a key window of opportunity for developers to secure approvals, funding and construction capacity, while buyers will have greater choice before supply constraints intensify."

Colliers research outlines a critical pre-2027 window to start residential projects before labour squeeze: now is the time to buy

Joel Robinson

Developers, buyers on watch in South East Queensland ahead of construction crunch: Colliers

It's taken less than nine months for developer Sherpa Property Group to sell out all 51 apartments in its <a href="https://www.apartments.com.au/new-apartments/flourish-oasis-palm-beach-7-9-sixth-avenue-palm-beach-qld-4221">Flourish Oasis</a> development in <a href="https://www.apartments.com.au/developments/palm-beach-qld-4221">Palm Beach</a>, over a year before its anticipated completion.

&nbsp;

Located at 7-9 Sixth Avenue, the $67 million development has resonated strongly with both local owner-occupiers and downsizers seeking high-quality apartments within walking distance of the beach, dining precincts and everyday amenities.

[smartcode_project:default project_id=151449 project_image_fid=357458]

Christie Leet, Founder of <a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Group</a>, said the sell-out reflected both the strength of the Palm Beach market and the success of Sherpa's community-first approach to development.

"The sell-out of Oasis is a fantastic outcome and reinforces the strong demand we're seeing for thoughtfully designed apartments in lifestyle locations," Leet said.

"From the outset, our vision was to create a development that genuinely enhanced the Palm Beach community while providing residents with exceptional homes and wellness-focused amenities.

"We've been incredibly encouraged by the level of local support throughout the campaign, 72.5 per cent of buyers are locals, with a significant proportion of purchasers choosing Oasis as their future home rather than an investment."

[smartcode_project:default project_id=151449 project_image_fid=357463]

Construction is now progressing following development approval, with trusted builder LPS Group delivering the project and completion anticipated in Q3 2027.

Oasis forms part of Sherpa Group's successful Flourish collection, which has become recognised for its focus on wellness, community and elevated coastal living.

[smartcode_project:default project_id=151449 project_image_fid=357469]

Residents will have private access to a rooftop amenity space featuring a pool, gym, sauna, steam room, hot and cold plunge pools, spa and barbecue facilities.

"The success of Oasis demonstrates that buyers continue to prioritise quality, location and lifestyle," Leet said.

"We are proud to have delivered a project that has resonated so strongly with the market and look forward to bringing Oasis to life for our future residents."

Sherpa recently launched <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a>, its third instalment of the Flourish brand in Palm Beach following Flourish Oasis and <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>.

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Sherpa sells out Flourish Oasis in booming Palm Beach

Urban Property Group's <a href="https://www.apartments.com.au/new-apartments/la-vera-macquarie-park-94-talavera-road-macquarie-park-nsw-2113">La Vera</a> is leading the next phase of Macquarie Park's residential evolution, with the new apartment development set to become the first of several new apartment projects in the precinct to complete.

The 169-apartment building has now topped out ahead of its scheduled completion in the third quarter of 2026, as new residential investment continues to reshape one of Sydney's largest employment hubs into a true mixed-use precinct.

[smartcode_project:default project_id=134951 project_image_fid=368645]

Cox Architecture has designed La Vera to capture the best of its unique positioning on Talavera Road, orienting the building towards Lane Cove National Park.&nbsp;The building features a sculpted northern façade with flowing curves inspired by the surrounding landscape, while its city-facing elevation adopts a more structured architectural expression to maximise skyline views.

"The vision for the project was to conceive a building that adopted an organic and curvilinear form to the northern portion that faces the Lane Cove National Park," <a href="https://www.apartments.com.au/architects/cox-architecture">Cox Architecture</a> Director Felipe Miranda said.

"The residents that reside in the northern portion of the building benefit by having beautifully crafted curved balconies that speak to the natural context and heighten the relationship of their internal living spaces to the external balconies."

[smartcode_project:default project_id=134951 project_image_fid=358802]

La Vera offers a diverse mix of one, two, three, and four-bedroom configurations, with prices currently starting from $740,000. Buyers so far have been a mix of Sydney-based investors,&nbsp;metro commuters, owner-occupiers and downsizers from surrounding North Shore suburbs.

Both investors and owner-occupiers have been drawn to La Vera's proximity to Macquarie University, Macquarie University Hospital, Macquarie Centre and the Sydney Metro, infrastructure that supports both strong rental demand and a convenient lifestyle for residents.

The apartments feature full-height glazing, timber flooring throughout living areas, stone kitchen benchtops, SMEG appliances, floor-to-ceiling bathroom tiling and ducted air conditioning.

Residents will have access to a rooftop recreation level featuring a swimming pool, sauna, barbecue facilities and landscaped relaxation areas, complemented by additional communal space at ground level. Many apartments enjoy uninterrupted views across Lane Cove National Park, reinforcing the project's connection to its natural setting.

[smartcode_project:default project_id=134951 project_image_fid=364551]

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a>, a family-owned developer and builder with nearly four decades of experience, holds a 4.5-star iCIRT rating and was Australia's first developer to introduce 10-Year Latent Defects Insurance (LDI). La Vera is the first apartment development in <a href="https://www.apartments.com.au/developments/macquarie-park-nsw-2113">Macquarie Park</a> approved to offer the additional insurance protection, alongside a five-year warranty on SMEG appliances.

Urban Property Group CEO Patrick Elias said the additional protection reflects changing buyer expectations in the off the plan market.

"Consumers are a lot more weary and a lot more concerned in buying off the plan than they ever have been. Having LDI is a tool to portray the confidence that we have in our product, and a confidence we want buyers to share," Elias said.

Following completion of the building later this year, buyers will move into their apartments well before Christmas.

[smartcode_project_cta:default project_id=134951]

La Vera closes in on completion as Macquarie Park continues residential transformation

Brisbane developer Red &amp; Co's decision to include dual key apartments in its debut Gold Coast apartment development, <a href="https://www.apartments.com.au/new-apartments/como-varsity-lakes-22-lake-street-varsity-lakes-qld-4227">COMO Varsity Lakes</a>, is proving to be one of the project's biggest drawcards, with buyers quickly snapping up the flexible residences.

More than half of the project's 36 dual key apartments have already sold, helping drive COMO beyond the 50 per cent sold mark within the first month of launch.

The strong response highlights growing demand for apartment designs that can adapt to changing lifestyles, with buyers increasingly looking for homes that accommodate multi-generational living, provide rental income opportunities or simply offer greater flexibility over time.

Located on the shores of Lake Orr, COMO will deliver 156 apartments across 16 levels, with the dual-key residences forming a limited release within the broader development.

Each combines a primary two-bedroom apartment with a fully self-contained studio on a single title, connected by a shared foyer and lockable internal door. The design allows owners to house ageing parents, adult children or guests while maintaining privacy, or lease the secondary residence to generate additional income.

Just 17 of the original 36 dual key apartments remain available.

[smartcode_project:default project_id=135546 project_image_fid=367096]

The innovative configuration combines two fully self-contained residences on a single title, typically comprising a primary two-bedroom apartment alongside a separate studio residence, connected via a shared foyer and lockable internal door.&nbsp;

The model is proving particularly attractive to owner occupiers navigating changing family dynamics and the realities of the current housing crisis.&nbsp;

[smartcode_project:default project_id=135546 project_image_fid=363511]

<a href="https://www.apartments.com.au/project-marketer/npa">NPA</a>&nbsp;CEO Andrew Erwin said dual key living was resonating strongly with modern buyers because it delivered both financial flexibility and practical lifestyle benefits.&nbsp;

“The housing crisis and rising cost of living are fundamentally changing how Australians think about home ownership,” Erwin said.&nbsp;

“Dual key apartments provide a genuine solution for families who want to stay connected while maintaining independence. Parents can help adult children save for a future home, ageing parents can remain nearby without moving into aged care, and owners still retain privacy and flexibility.

“Importantly, buyers are also recognising the financial advantages. It creates the opportunity to generate additional income from part of the home without the holding costs associated with owning a separate investment property.”&nbsp;

[smartcode_project:default project_id=135546 project_image_fid=363509]

Unlike traditional dual occupancy arrangements, the residences operate under a single title, meaning owners only incur one set of body corporate fees, council rates and holding costs.&nbsp;

The secondary residence can also evolve over time - functioning as guest accommodation, a home office, creative studio or private retreat before later becoming an income-producing asset.

<a href="https://www.apartments.com.au/developers/red-co">Red &amp; Co</a>&nbsp;Director and Co-Founder David Laverty said the strong early sales reflected growing buyer urgency and changing priorities within the market.&nbsp;

“Securing more than half of COMO’s residences within such a short timeframe is an outstanding result and a clear endorsement of both the design and location,” Laverty said.&nbsp;

“Buyers are responding to the combination of location, connectivity and amenity, but ultimately it’s value relative to other East Coast markets that is driving enquiry.”&nbsp;

“We’re also seeing strong interest from owner occupiers looking for homes that can adapt with them over time. Flexibility has become one of the most important considerations for buyers in today’s market.”&nbsp;

[smartcode_project:default project_id=135546 project_image_fid=363515]

Designed by <a href="https://www.apartments.com.au/architects/bda-architecture">BDA Architecture</a>, COMO features a mix of one-, two- and three-bedroom residences with 2.7-metre ceilings and larger-format floorplans aimed at owner occupiers, downsizers and lifestyle-focused buyers.&nbsp;

The development will feature an extensive rooftop recreation and wellness offering including a 25-metre lap pool, sundeck, barbecue and dining areas, gym, sauna, plunge baths, landscaped gardens, wellness spaces and rooftop pickleball and paddleball courts.

The remaining dual key apartments range from 137 sqm to 167 sqm and include generous three-bedroom layouts with separate self-contained studio accommodation and dual parking.&nbsp;

Erwin said the dual key concept represented a broader shift in how Australians would live in the future.

“People want homes that can evolve with their lives,” he said.&nbsp;

“A dual key apartment can suit a family today, support an ageing parent tomorrow, and potentially generate income later on. That adaptability is becoming incredibly valuable in the current environment.”

Prices currently range from $2,115,750 to $2,583,000.&nbsp;

[smartcode_project_cta:default project_id=135546]

Inter-generational living drives demand for COMO’s dual key apartments as housing pressures reshape buyer priorities 

Builder-developer&nbsp;<a href="https://www.apartments.com.au/developers/ceerose">Ceerose</a> has doubled down on its Leichhardt ambitions, lodging its second State Significant Development Application (SSDA) in the suburb in the last six months.

Their newest proposal seeks to transform a former industrial precinct into a new residential community centred around the adaptive reuse of one of the site's heritage warehouse buildings.

The new project, on a 6,930 sqm block at&nbsp;<a href="https://www.apartments.com.au/new-apartments/40-76-william-street-leichhardt-nsw-2040">40–76 William Street</a>, will bring more than 200 apartments to a suburb that has seen little to no new supply in recent years. It follows Ceerose's late 2025 SSDA for a mixed-use apartment project on nearby Parramatta Road, signalling the developer's growing investment in Sydney's Inner West.

Ceerose Founder Edward Doueihi told Apartments.com.au the developer’s long-standing presence in Leichhardt and the Inner West had given it a strong understanding of how the area has evolved and where its future opportunities lie.

“Ceerose has had a long-standing presence in Leichhardt and the Inner West, giving us a unique understanding of the area’s evolution and future potential,” Doueihi said.

“Having delivered projects throughout the region, we have witnessed the suburb’s transformation first-hand and understand the opportunities for its continued growth.”

Doueihi said that understanding also informed the planning process, with a comprehensive Stakeholder Engagement Outcomes Report prepared before the application was lodged.

The report identified the key issues and concerns raised by neighbouring residents and other stakeholders, allowing those matters to be considered and incorporated into the design where appropriate.

He said the delivery of additional housing would also play an important role in supporting the revitalisation of Norton Street and the Italian Forum.

“By increasing the local residential population, the development is expected to strengthen demand for local businesses, encourage further investment, and help restore the vibrancy that made the precinct a thriving destination in the early 2000s.”

<img alt="First look: Ceerose returns to Leichhardt with 203-apartment adaptive reuse proposal at former warehouse site" data-entity-type="file" data-entity-uuid="7258c54c-8167-479e-8361-2d5fca9915b4" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Appendix%2010B%20-%20CGI%20-%20View%202.jpg?VersionId=S9DQfxu_jpcB5LrAEYFUbyMzg5odW6i5" />

Designed by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a>, the redevelopment would involve the demolition of four existing industrial buildings while retaining and adaptively reusing the site's most significant warehouse. The retained structure would anchor a new residential precinct comprising five interconnected buildings arranged around a large central landscaped courtyard, with heights stepping from five storeys along the surrounding residential streets to 11 storeys at the William Street corner.

According to the Architecture Design Report by Woods Bagot, the proposal "seeks to create a residential village centred around a generous green heart while celebrating the site's industrial heritage through the adaptive reuse of the existing warehouse building."

The development would comprise 203 apartments, with 188 proposed as build-to-sell residences, alongside 15 affordable housing apartments.

Rather than treating the retained warehouse as a standalone heritage object, Woods Bagot has sought to weave the site's industrial history throughout the masterplan. The proposal retains the north and west facades of the landmark corner warehouse, while new buildings reinterpret the site's brick-and-steel industrial language through their material palette and architectural expression.

<img alt="First look: Ceerose returns to Leichhardt with 203-apartment adaptive reuse proposal at former warehouse site" data-entity-type="file" data-entity-uuid="9e8c64c2-881b-49e1-8c90-6b6acaaa45b6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Appendix%2010C%20-%20CGI%20-%20View%203.jpg?VersionId=Qm8_8H_Xrg_sc4Mdjc59vlAcKF_5wRTb" />

The design is organised around what Woods Bagot describes as a "green heart", a landscaped communal open space that reinstates the leafy character removed when the site became an industrial storage facility. A new pedestrian laneway running through the site would improve permeability between William, North and Francis streets, linking residents through landscaped public spaces while activating the ground plane.

Residents would have access to communal gardens and shared recreation areas distributed throughout the development. Sustainability has also been prioritised, with the project targeting an average 7.9-star NatHERS rating. Proposed initiatives include rooftop solar generation, rainwater harvesting, passive solar design, naturally ventilated lobbies, extensive cross-ventilation and the reuse of existing building fabric to reduce embodied carbon.

The adaptive reuse strategy became a defining feature of the application after heritage investigations found only one of the site's industrial buildings could feasibly be retained. The Heritage Impact Statement concludes that preserving the key warehouse façades while referencing the site's industrial character throughout the new development provides an appropriate balance between renewal and conservation.

<img alt="First look: Ceerose returns to Leichhardt with 203-apartment adaptive reuse proposal at former warehouse site" data-entity-type="file" data-entity-uuid="efffafdb-594f-4e2b-a067-921fd51c05e1" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Appendix%2010D%20-%20CGI%20-%20View%204.jpg?VersionId=DPmE4.k16YRt0i27hEZVtJAffarpvUfx" />

"Retention and adaptation of the site buildings has been explored but found not to be feasible except for the tallest building, whose street facades will be retained," the heritage report states.

"The proposed building will interpret the brick and steel character of the subject site, including reuse of some components and construction of a large 'sawtooth' structure in the proposed open space."

<img alt="First look: Ceerose returns to Leichhardt with 203-apartment adaptive reuse proposal at former warehouse site" data-entity-type="file" data-entity-uuid="3bfef2b5-83f5-40cd-9cab-767092f34266" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Appendix%2010E%20-%20CGI%20-%20View%205.jpg?VersionId=7asb3i_ql4ybbuJOUb5UHBEIy0Q9t.DF" />

The William Street site is located around 300 metres from Leichhardt North Light Rail station and a short walk to Norton Street's retail, dining and hospitality precinct. The surrounding area has increasingly become a focus for urban renewal given its proximity to public transport and the Parramatta Road corridor.

Doueihi founded Ceerose in 1998 and has grown the business to become one of Sydney's more active apartment developers in recent years, with completed projects including The Alex Collective in Alexandria, Abbie's Lane in Annandale, and the award-winning Munro House in Elizabeth Bay. They are currently delivering Belgravia, 17 luxury apartments in Potts Point.

Zoe Fielding

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