Residential developer Sunland Group has reported a 42 per cent slide in revenue to $160 million over the fiscal year as the investor market continues to shrink in the face of the Covid-19 crisis.
The company’s net profit declined by 85 per cent to $2.4 million due to write downs totalling $13.9 million to a number of projects’ values.
The listed developer, which builds apartments and housing lots, said the retreat of investors and foreign buyers had hurt its performance but it had repositioned itself quickly to embrace the downsizer market.
“[Sunland] is not immune from the economic implications brought about by the Covid-19 pandemic on the industry and broader market, which have flowed through the group’s performance and strategies,” Sunland managing director Sahba Abedian said.
“It is evident there has been an increase in demand from downsizers and our response to these changes and buyer demographic is to place a higher emphasis on designing for the owner-occupier market.”
In the year ended June, the group generated its revenue from 357 sales, up from 237 in 2019, and 236 settlements, down from 382 the year prior.
Settlements occurred at its Queensland projects, The Heights in the Gold Coast, and The Hills in Brisbane, with both The Gardens in Melbourne and 18 MacPherson Street in Sydney both fully settling.
Abedian said in light of the change in market sentiment the group had scrapped and expensed $8.5 million in consultancy costs for project designs that would not meet market demand at Grace, Mariners Cove, Greenmount and Lanes Retail.
The group also reassessed values of its Bushland Beach and Labrador projects, adjusting carrying value by $5.5 million.
“Sunland has traditionally taken a counter-cyclical approach with its portfolio and during this time of uncertainty directors have a more conservative approach to capital management,” Abedian said.
Sunland currently has six projects under construction along Australia’s east coast, and a further six in planning, within its $3 billion portfolio.
At Mermaid Waters, Sunland is now pressing ahead with a $240 million lakefront apartment development, part of its masterplanned community The Lakes, a 42-hectare $1.3 billion community and leisure-lifestyle retail village.
Sunland also has plans in front of council for a 16-level boutique apartment project at 180 Marine Parade in Labrador.
The developer has also been actively recycling assets, earlier this year offloading an undeveloped portion of its 46.4-hectare subdivision site at Pimpama to over-50s resort developer Gemlife for more than $29 million.
Earlier this year, Sunland sold two locations, Lakeview Retail at the Gold Coast and Ingleside in Sydney for a combined $37.9 million due to market demand for sites, and to unlock value in its balance sheet.
The developer also said its $28 million windfall from the sale of its 3.9-hectare Mariner’s Cove retail village and marina precinct at The Spit, adjacent to the Sunland-developed Palazzo Versace hotel, will contribute $8.1 million profit—once it had settled in September—towards its 2021 result.
Sunland lodged plans for a much-debated Toowong site in 2014, however, the three tower residential development but became bogged down in the courts and saw plans rejected by the Supreme Court in 2018.
The Group is also selling a 3.25 hectare “shovel-ready” townhouse development site at 20 Margaret Court in Brisbane’s northern suburbs.
The site has development approval for 96 premium townhomes.
The group declared a final dividend of 7 cents per share.