Two Perth-based residential developers are turning to the east coast for future growth after reporting strong annual results, particularly focusing on medium-density dwellings in southeast Queensland and Melbourne.
As to their hard-hit home market in Western Australia, Cedar Woods Properties is seeing early signs of improved conditions while Peet Limited expects to see conditions remain subdued.
Cedar Woods shares closed at $5.11 yesterday, up 1.4 per cent, and Peet closed up 1.0 per cent at $1.
Cedar Woods, which delivered a record net profit of $43.6 million for the year to the end of June, entered the Queensland market two years ago and expects to see the first revenue contribution from its operations in the state in the current financial year.
“Certainly on the housing market, we are expecting that over the next three years Queensland probably will outperform other states,” managing director Paul Sadleir said. “There is a bit of catch-up going on. There wasn’t much going on for a period of time and now a lot of people have decided it is time to buy.”
During the past financial year, the company launched its Ellendale project in Upper Kedron, in Brisbane’s northwest, with 50 presales achieved. It bought another 3.8ha site in the north of Brisbane with plans to develop a medium-density residential project.
“Current high prices in Sydney and Melbourne are expected to cause increased demand for property in Brisbane as investors chase higher yields and owner-occupiers seek greater affordability,” Mr Sadleir said. In Melbourne, the company avoided CBD high rises, instead focusing on medium-density housing in the inner-ring suburbs including the town centre development at Williams Landing, in the southwest.
“We are looking more towards medium density. The infill locations seems to be in demand,” said Mr Sadleir, noting Melbourne offered rezoning opportunities for residential development.
Peet also sees Melbourne and Brisbane as its two key markets as the company continues to leverage its land bank in the growth corridors of major cities.
“The key areas for us are Brisbane, southeast Queensland and Melbourne, managing director Brendan Gore said. “We don’t rule out Sydney, but we put it at the lower end of the probability.”
The company reported $42.6m in net profit for the 2016 financial year, up 11 per cent from the previous year, backed by price growth and strong demand across its Victoria land portfolio.
Last month, Peet bought a 1100-lot residential project in Redbank Plains, an outer southwest suburb of Brisbane, in partnership with the Thailand-listed developer Supalai Public Company.
In WA, Peet expects to see conditions remain subdued through the current financial year.