Larry Schlesinger | 8 February 2012

Australand profits down but late 2011 residential lot sales strong

Diversified property group Australand expects Melbourne and Sydney buyers to continue to drive sales in its residential communities following the release of poor end-of-year figures.

Australand reported net profit of $140.62 million for the year ending December 31, 2011, a drop of 15% on net profit of $166 million in the 2010 calendar year.

Its residential division recorded earnings of $76.1 million, up 13% compared with $68 million in 2010.

The group managed total lot sales of 2,536 over the course of the year, an increase of 15% on 2010, with Melbourne and Sydney contributing 80% of buyers.

The top-performing residential development during 2011 was Greenhills Beach in the Sutherland Shire of Sydney, where prices ranged from $795,000 for a 550-square-metre coastal lot to $980,000 for a 740-square-metre beach lot.

The other top-selling projects were Burwood (Victoria), Cranbourne West (Victoria), Clyde North (Victoria), Greenvale (Victoria), Cockburn Central (WA) and Kangaroo Point (Queensland).

The group reported that sales momentum picked up in the second half of the year following interest rate cuts and incentives from state governments

“We expect Sydney and Melbourne to contribute significantly to sales and earnings in 2012 despite some softening of conditions in Melbourne.

“Perth continues to see a gradual recovery. However, the south-east Queensland market remains challenging,” says Australand.

The group is not anticipating sales volume growth in 2012 but is forecasting higher earnings due to higher margins and higher average sales prices “driven by the mix of products we sell”.

Australand has 21,800 individual lots under management in its development pipeline with an end value of $8.1 billion.

Its $2.1 billion investment portfolio (made up of industrial and office assets) delivered earnings of $166 million, up from $161 million.

Earnings were down in its commercial and industrial division ($29 million in 2011 compared with $32 million 2010).

Overall, the group expects conditions to remain challenging for at least the first half of 2012 but is “cautiously optimistic” about its earnings in 2012.