Mirvac bets on strong housing market
Home owners fretting over talk of a housing bubble can take comfort from developer Mirvac, which is betting on another five years of growth in Sydney and a pick up in prices elsewhere.
The revival of the housing market over the past 12 months helped lift Mirvac's operating profit 16 per cent to $438 million in the 2013/14 year, and the company expects further gains this financial year.
Chief executive Susan Lloyd-Hurwitz said Sydney would remain the strongest market for some time, and price gains would flow through to the rest of the country over time.
"Our view at the moment is there is plenty of room, both from a supply and demand point of view, for continued modest price growth and moving out around Australia," she said.
Mirvac is putting its money where its mouth is, with 50 per cent of its new property releases up to 2015 located in Sydney.
Chief investment officer Brett Draffen said a lack of housing supply, low rental vacancies and above average population growth will drive further growth in the city's property market.
"The outlook for Sydney we think is fairly robust over the next two to five years," he said.
But Ms Lloyd-Hurwitz said Sydney price rises would be more moderate than in the past year.
Despite the upbeat outlook, Mirvac is expecting only a modest lift in its 2014/15 operating profit, to between $443 million and $455 million.
Mirvac also expects the improving Sydney economy to provide a boost to its shopping centre business, after substantially increasing the exposure of its retail division to the city in 2013/14.
Growth was also forecast for Mirvac's industrial division, though the company says its office portfolio is facing challenging conditions.
Mirvac securities were down four cents, or 2.1 per cent, at $$1.865 at 1355 AEST.
STRONGER PROPERTY MARKET LIFTS MIRVAC
Net profit of $447.3m, up from $139.9m in 2012/13
Operating profit of $437.8m, up 16 pct from $377.6m
Full year dividends of nine cents, up from 8.7 cents
