Despite its residential interests failing to deliver strong results, NSW-based property developer Australand Property Group has recorded an operating profit after tax of $163.2 million, an increase of 5 per cent on the previous period.
While profit from its commercial and industrial market was up 75 per cent to $70.1 million, the residential sector failed to deliver a similar increase, with total revenue down 6 per cent and full-year profit before tax up by just 1 per cent ($106.3 million).
Australand said a strong profit contribution from Perth and Melbourne helped to offset the Sydney market, which remained challenging and was not expected to recover until after 2008.
Of the group’s total residential portfolio, WA contributed 24 per cent of revenue in 2007, making it the second largest market.
However, as a proportion of Australand’s $6.8 billion development pipeline, WA makes up the largest share of any state, worth $2.5 billion.
This is derived mainly from the company’s Port Coogee and Yanchep Beach projects, which are Australand’s two most valuable residential projects overall.
The Port Coogee development, which consists of 1,342 lots, is worth $1.26 billion and is scheduled for completion beyond 2012.
Australand has a further $270 million stake in a joint venture at Port Coogee.
Its Yanchep Beach project, worth $480 million and containing 2,335 lots, is due to come on line halfway through this year.
Other projects in East Perth, Cockburn Central and Baldivis are worth a combined $379 million.
In total, the company’s residential pipeline increased in volume by 11 per cent in 2007.
Australand said the outer suburban market had slowed from a high base and was expected to continue to decline. However, the company said fundamentals remained strong in the residential market, with inner-city and near-water locations expected to continue to improve in value.
Australand said a rise in interest rates would put pressure on the sector and affordability constraints remained an issue, particularly in Sydney and Perth.
Of the company’s commercial and industrial market, WA makes up 14 per cent of total project value.
This includes its 14 hectares of land at Perth Airport and 6ha at High Wycombe.
