STOCKLAND no longer expects to book a nominal EPS growth for FY09, instead it has forecast earnings will fall by 7%.
Managing director Matthew Quinn said yesterday said after allowing for the write-down in
“In providing this guidance we are also assuming there is no further material deterioration in economic conditions during the rest of the year,” he added.
Stockland is now working to offset its bad move into the
Quinn believes cap rates for its Australian investment properties have softened by an average of around 50 basis points since June 30 2008, on top of the 30 basis points in the previous six months.
“While valuations have fallen across the board and demand for new office space has tapered off, we have seen a significant improvement in tenant retention rates as businesses decide to stay put during these turbulent times.
“And the decline in new building construction resulting from the credit crunch will only increase the demand on existing stock,” he continued.
Meanwhile Quinn said the residential market came off the boil markedly in March this year when interest rates were increased.
But he said the recent interest rate cut and the Federal Government’s announcement that it will increase the first home owner’s grant should inject some much needed confidence.
“Despite the strong rental market and record low residential vacancies, many buyers lack confidence to enter the market as there are growing fears about job security and the depth of the fallout from the global credit crisis.
“The good news is that residential market fundamentals remain positive for the medium to long term. Demand will be supported by population growth and there is still a significant supply deficit in key markets,” he concluded.
Australian Property Journal