Property developer Lend Lease believes the housing market is nearing its peak.
“The Australian market remains strong yet it is easy to see that we’re somewhere near the peak of the cycle,” chief executive Steve McCann said.
Strong demand for Australian housing, driven by population growth, low interest rates and overseas investors, helped Lend Lease more than double its revenue from pre-sold residential projects to $3.9 billion in the year to June.
The entire second phase of residential development at Sydney’s Darling Square sold in just five hours, and more than 90 per cent of pre-sales were achieved at its Victoria Harbour project in Melbourne and The Yards at Brisbane Showgrounds.
Mr McCann said several factors should offset the property market’s strength, including bank credit restrictions, a cap on lending growth in certain sectors, and a greater balance between supply and demand.
“At this stage though, we have not seen any impact from these changes,” he said.
Lend Lease made a net profit of $619 million in the year to June 30, in line with its guidance, but down nearly 25 per cent from a year ago when profit was boosted by proceeds from the sale of a UK shopping centre.
Mr McCann said strong demand for residential property in Australia and the UK would continue to deliver benefits in the coming years.
“In the last year our pre-sold residential revenue has more than doubled to $5.2 billion, with the related revenue to begin emerging as profit and cash from the 2016 financial year onwards,” he said.
Lend Lease’s development pipeline grew 19 per cent to a record level of almost $45 billion in 2014/15, after recently securing major projects in Asia and the US.
Lend Lease’s global construction business secured $11.8 billion in new work and lifted profit by 10 per cent despite a lower contribution from Australia.
Lend Lease securities were down 38 cents, or 2.7 per cent, at $13.93 at 1500 AEST.
UK SHOPPING CENTRE SALE SKEWS LEND LEASE RESULTS
* Net profit down 25pct at $618.6m
* Revenue down 5pct at $13.3b
* Final distribution down 22 cents at 27 cents