The Urban Developer
AdvertiseEventsWebinars
Urbanity
Awards
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
Untitled design (8)
FIRST RELEASE TICKETS ON SALE FOR URBANITY-25 CONNECTING PROPERTY LEADERS ACROSS THE ASIA PACIFIC
FIRST TICKETS ON SALE FOR URBANITY-25 WHERE THE PROPERTY INDUSTRY CONNECTS
SEE DETAILSDETAILS
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
Partner Lab
Resources
Terms & Conditions
Commenting Policy
Privacy Policy
Republishing Guidelines
Editorial Charter
Complaints Handling Policy
Contact
General Enquiries
Advertise
Contribution Enquiry
Project Submission
Membership Enquiry
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
ADVERTISEMENT
SHARE
10
print
Print
RetailAna NarvaezWed 06 Mar 19

Deteriorating Outlook Hits Developers in Residential, Retail Sectors

d8f97f2d-18d3-4622-a069-d08be2e85793

The February reporting season has now ended, and Australia’s residential and retail property subsectors recorded worse than expected results.

Australia’s listed property heavyweights returned results largely in line with the expectations of structural and cyclical trends, with Goodman Group, Charter Hall and Dexus outpacing their competitors.

UBS analysts had Lendlease, Vicinity and Aventus Group losing out in its ranking of Australia’s listed real estate investment trusts – blaming retail and residential headwinds.

“Our results scorecard ranked Goodman, Charter Hall and Dexus as the top three, whereas Lendlease, Aventus and Vicinity were at the bottom,” UBS analysts Grant McCasker and James Druce said.

“Results from reporting season clearly illustrate the impact of the credit tightening environment.

“We anticipate conditions (impact of price declines, default rates etc.) to deteriorate further throughout 2019 in the absence of policy adjustments.”

Increasing scrutiny on a plethora of retail assets hitting the market is set to be the biggest headwind for the property sector in 2019.

Related: Mirvac ‘Most at Risk’ in Falling Market: UBS

UBS has maintained its "sell" recommendation for Stockland. Pictured: CEO Mark Steinert.


No inflection point in sight

With residential and retail earnings from reporting season coming in below UBS’ “already cautious expectations”, analysts downgraded earnings of REITs exposure by 2 per cent to 4 per cent over the forecast period.

“The pricing differential between ‘haves’ and ‘have nots’ appears extreme but we see no inflection point in sight,” McCasker and Druce said.

“Facilities management businesses, office and logistics look set remain in favour throughout 2019 despite historically high pricing.”

“We see value in Lendlease (high risk, but long term re-rating expected) and small caps (Centuria and Rural Funds Group) with no re-rating in sight for retail.”

McCasker and Druce said their retail preferences were for SCA Property Group and Scentre.

The analysts maintained their sell recommendation for Mirvac and Stockland. The investment bank first downgraded Stockland’s rating from “sell” to “neutral” in mid-2018.

“For Stockland to hit its guidance target of 5 per cent growth and 6,000 lots for the financial year, it needs to settle 3,600 lots in 2H,” McCasker and Druce said.

“This is a large task, which has only been achieved once (2H17).”

Related: Stockland Profit Takes 6.7pc Hit, ‘Conditions Challenging’

Hero image: Stockland's Marsden Park. The developer is offering $20K discounts and up to $100K building bonuses in the new community.

RetailResidentialAustraliaFinanceReal EstateSector
AUTHOR
Ana Narvaez
The Urban Developer - Editorial Director
More articles by this author
ADVERTISEMENT
TOP STORIES
Bankstown cbd in Sydney NSW EDM
Exclusive

Breaking Delivery Crisis Chokehold on NSW’s Biggest Housing Market

Vanessa Croll
7 Min
Healthscope Hospital EDM
Exclusive

‘Once-in-a-Decade’ Opportunities Rise in Wake of Healthscope Collapse

Clare Burnett
7 Min
Exclusive

Parking Upsize Threatens Fatal Blow to Project Feasibility

Phil Bartsch
6 Min
One New Zealand Stadium BESIX Watpac
Exclusive

Rising to a Challenge: How BESIX Watpac Topped Australia’s Builders

Clare Burnett
7 Min
Exclusive

Rewards Outstrip Risk in SE Queensland Off-The-Plan Buys

Taryn Paris
7 Min
View All >
Development

Melbourne Luna Park Revival Wins State Backing

Marisa Wikramanayake
Sponsored

Fast Funds, Real Help—Woodbridge Capital Delivers Both

Partner Content
Bankstown cbd in Sydney NSW EDM
Exclusive

Breaking Delivery Crisis Chokehold on NSW’s Biggest Housing Market

Vanessa Croll
Buyers are ready, the homes are not: Fixing the Western Sydney housing crisis is a sum of its parts, a Sydney summit has…
LATEST
Development

Melbourne Luna Park Revival Wins State Backing

Marisa Wikramanayake
2 Min
Finance

Fast Funds, Real Help—Woodbridge Capital Delivers Both

Partner Content
5 Min
Bankstown cbd in Sydney NSW EDM
Exclusive

Breaking Delivery Crisis Chokehold on NSW’s Biggest Housing Market

Vanessa Croll
7 Min
Sydney Fish Market Blackwattle EDM
Planning

Sydney Fish Market Rezoning Clears Way for 320 Homes

Clare Burnett
2 Min
View All >
ADVERTISEMENT
Article originally posted at: https://theurbandeveloper.com/articles/deteriorating-outlook-hits-developers-in-residential-retail-sectors-