Listed Developer Englobo Holdings

logo-listed-asxSharemarket-listed property developers hold 264,000 residential lots in their development pipeline – 19.3 years supply with a disclosed end value of $80 billion – in a year when they sold only 13,000 lots, according to analysis by Prosper Australia.

The largest holder is Stockland, followed by Lend Lease, with a giant 28.2 years supply of undeveloped land, firmly reduced from last year’s 33 years supply on higher sales. PEET has added substantially to its landbank, up from 34 000 lots to 51 000.

Listed developer land holdings by time extend well beyond government planning time frames, the classic definition of ‘landbanking’. They have land – hundreds of thousands of lots in development – but choose to ration it.

Listed developers are a minority of developers. Their lot sales last year were around a tenth of building approvals, but their behavior is publicly visible – and instructive.

It can be argued this is far-sighted corporate behavior, like a winery holding vintage wine while it matures. In practice, landbanking developers hold new home buyers to ransom by limiting supply and driving up prices. High prices for parcels on the periphery boost the price of all better located land with shorter transits and already-built facilities.

Land in Australia should be dirt cheap. Outstanding access to land ought be a national advantage, generously conferred by a loving government upon the citizens it represents.

Developer selfishness can be changed by astute application of State Land Tax. Broadacre land in Precinct Structure Zones ought be taxed as if it were already in use. Developers would turn their holdings as quickly as possible, rather than hoarding it.
Withholding vacant land from use displaces activity and drives up land prices – to the great advantage of all existing landowners. While developers can rightly argue they are constrained by government planning controls, their behavior speaks loudly.

They respond to falls in sales volumes and prices by further reducing the size of lots to maintain margins and turnover.
Previous land price downturns have been characterized by developer bankruptcies as banks made margin calls on this traditionally highly-geared industry. The listed group now carry very little or no debt against their landbanks. All have a level of debt, mostly secured against commercial and industrial projects or ready-for-sale lots.

 

 

Listed Developer Land Holdings June 2013

 

Lots settled

Lots in development

Disclosed end value

Average lot value

Land bank

Debt/debt+equity[1]

2013

Number

$ millions

$‘000

Years

Australand

1 788

18 900

  7,600

402

10.5

43.0%

Sunland

  662

  5 322

  3,000

563

12.4

3.3%

AV Jennings

  9 952

23.4%

PEET

2 091

51 173

10,500

205

25.5

47.6 %

Mirvac

1 809

30 942

17.1

27.1%

FKP[2]

  242

  4 250

38.3%

Lend Lease

2 468

69 631

37,400

NC[3]

28.2

31.3%

Stockland

4 641

84 400

21,200

251

18.1

27.6%

Totals

13 701

264 618[4]

79,700

NC

19.34

Source: ASX Company reports

 

Listed Developer Land Holdings June 2012

 

Lots settled Lots in development Disclosed end value Average lot value Land bank

Year to 6/13

Number

$ Billions

‘000

Years

Australand

1 108

21 300

8.0

531

19.2

Sunland

672

2 889

1.1

380

4.3

PEET

2 052

34 000

6.2

182

16.5

Mirvac

1 807

29 787

10.6

356

16.5

FKP

410

4 725

1.4

287

11.5

Lend Lease

2 059

68 006

13.0

191

33.0

Stockland

5 388

87 900

23.0

338

16.3

Totals

13 496

248 607

63.3

Av  18.4

Source: ASX Company reports

 


[1] Debt = interest bearing liabilities PLUS derivative liabilities.

[2] FKP is renaming itself Aveo and transitioning to a retirement only developer: “All remaining $767m of non-retirement assets are in a sale process with most under negotiation or in due diligence.”

[3] LLC is a multifunction giant.  Lots settled 2013 comprise 2295 land lots and 173 built form.  ‘Estimated pipeline end value of $37.4 billion’ demonstrably includes considerable construction activity hence average lot value not calculated.

[4] Excludes AV Jennings

 

 

 

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https://prosper.org.au/2013/11/27/listed-developer-englobo-holdings-2/