The Urban Developer
AdvertiseEventsWebinars
Urbanity
Awards
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
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
6
print
Print
OtherAna NarvaezThu 31 Jan 19

Mirvac ‘Most at Risk’ in Falling Market: UBS

6b75c2ec-d62f-4ab2-a8e1-3ad53be3ce47

Investment sentiment toward some of Australia’s largest developers is waning, with falling property prices putting pressure on settlements.

UBS market analysts have maintained their “sell” recommendation for Mirvac, putting the developer ahead of Stockland and Lendlease in terms of exposure to settlement risk.

Apartment prices are 7 per cent down from their peak in Sydney and 2 per cent in Melbourne, with further falls expected.

Investors comprise a large chunk of Mirvac’s apartment buyers, and with sales trending down, particularly in NSW, the company’s earnings are sensitive to the slump.

“[Mirvac’s] most at risk projects are in Sydney (Marrickville and Sydney Olympic Park), which appear already out of the money with the Sydney apartment price index down 5 per cent since launch,” UBS analysts Grant McCasker and James Druce said.

Related: Inflation Pulse Check Good for Home Buyers

UBS analysts described Mirvac's Sydney Olympic Park (Pavilions by Mirvac, pictured) and Marrickville as "most at risk". BVN


UBS’ bearish stance on Mirvac is due in part to the launch dates of its projects stretching out beyond 2020, with a third of the group earning’s scheduled to come from apartment sales that year.

This is contrasted with Lendlease’s apartment pipeline, which is scheduled to dry up entirely in 2020-21.

“We are less concerned about Lendlease’s settlement risk given the price growth since the 2015-16 launch dates,” the analysts wrote.

A spokesperson for Mirvac said it was in “blackout” prior to the release of its results next Thursday, but its head of residential Stuart Penklis said that the company was monitoring the changing markets.

“It is important to remember that ‘average’ price changes mask significant differentiation between submarkets and housing type,” he said.

“We believe that our disciplined approach to restocking, our commitment to design excellence, a quality product and customer care will continue to differentiate us from others in the market.”

UBS noted that recent data suggested that cancellations were increasing.

“Cancellation rates continue to run at very low levels to date however, tightening credit, price declines, increased levels of incentives, lower deposits and a large amount of nomination contracts advertised on trading sites suggest this will rise.

“We expect Stockland’s [2019] second half settlements to disappoint as cancellation rates increase and settlement times extend.”

Hero image: Artist rendering of Pavilions by Mirvac.

OtherResidentialAustraliado not useMelbourneOther
AUTHOR
Ana Narvaez
The Urban Developer - Editorial Director
More articles by this author
ADVERTISEMENT
TOP STORIES
Parallel Workshops Stockdale Housing PBSA project
Exclusive

Suburban Success Story Turns PBSA Thinking on its Head

Leon Della Bosca
7 Min
Exclusive

Interstate Developers Find Lots to Love in ‘Progressive, Affordable’ SA

Taryn Paris
5 Min
Bates Smart Richmond Sportslink HERO
Exclusive

BtR Focus Drives Bates Smart’s Richmond Sportslink Concept

Leon Della Bosca
6 Min
Exclusive

Carparking Correlation: How Parking Fees Provide Office Sector Health Check

Taryn Paris
6 Min
Molti chief Ben Teague out front of 32 Mercer Road Aramadale (rendering)
Exclusive

Buy to the Sound of Cannons: Molti’s Counter-Cyclical Move to Melbourne

Leon Della Bosca
5 Min
View All >
Kangaroo Point Aria Canopy House Revised DA Approval hero
Development

Aria’s Revised Tower Greenlit for Inner-City Kangaroo Point

Phil Bartsch
Hotel

Perth Hotel New Role Revealed After $105m Sale

Lindsay Saunders
Warren and Mahoney's rendering of Leftfield's project at 691-693 Burke Road, in Melbourne's Camberwell.
Residential

Leftfield Lifts Cover on 14-Storey Scheme at Camberwell

Marisa Wikramanayake
The 57-apartment proposal at Camberwell comes as Melbourne’s move toward densification gain pace...
LATEST
Kangaroo Point Aria Canopy House Revised DA Approval hero
Development

Aria’s Revised Tower Greenlit for Inner-City Kangaroo Point

Phil Bartsch
3 Min
Hotel

Perth Hotel New Role Revealed After $105m Sale

Lindsay Saunders
2 Min
Warren and Mahoney's rendering of Leftfield's project at 691-693 Burke Road, in Melbourne's Camberwell.
Residential

Leftfield Lifts Cover on 14-Storey Scheme at Camberwell

Marisa Wikramanayake
3 Min
Parallel Workshops Stockdale Housing PBSA project
Exclusive

Suburban Success Story Turns PBSA Thinking on its Head

Leon Della Bosca
7 Min
View All >
ADVERTISEMENT
Article originally posted at: https://theurbandeveloper.com/articles/mirvac-most-at-risk-in-falling-market-ubs-