One of Australia's largest Apartment developer companies, Mirvac has demanded an urgent update in building standards, after describing the sale of unfit units as a breach of faith this month. Chief Executive Susan Lloyd-Hurwitz announced that it's time for swift improvements to be made to current construction practices after local apartment towers were recently evacuated due to safety issues for tenants. She believes that building standards in Australia aren't fit for purpose.
According to Ms. Lloyd-Hurwitz, the situation is "unacceptable" for families who have purchased or rented apartments believing that they were investing in a safe home for their loved ones to suddenly find themselves without a place to live. Susan called the issue "outrageous," saying that tenants are now being forced to battle through legal processes to get the money required to rectify building problems.
Mr Lloyd-Hurwitz believes that the breach of faith is more than just a transactional mistake. The homes in questions represent the life savings and dreams of countless Australians who just wanted a better quality of life. She said that Mirvac is supporting the recommendations for improved standards made by the Shergold Weir report and will be working with the government and property council to update the industry.
Rectifying the Problems with Building Standards
According to Ms. Lloyd-Hurwitz, another inquiry into construction quality isn't necessary, as Mirvac is already taking steps to address the problems. However, the company has already benefited from the crisis somewhat, as consumers sought out a better-known brand during the time when the market was slowing. Despite a challenging environment, Mirvac has been able to sustain sales throughout the financial year, reaching their settlement target.
Mirvac believes that there won't be a massive uplift in residential sector confidence until well into 2020, or even 2021. However, in the meantime, Mirvac's profits are holding steady. The company achieved a gain of more than $1 billion for the fourth consecutive year in a row. The developer is now the second largest office landlord in the country too. Ms. Lloyd-Hurwitz said that the company's robust capital position and the acceleration of their passive earnings growth mean that they'll be well-placed to continue generating strong returns for security holders.
Healthy outcomes in the group's industrial and office businesses have offset a significant slump in its residential market, which is facing a challenging environment at present. This year, Mirvac's profits for new house, apartment and land sales in Brisbane, Melbourne, and Sydney fell 27% from last year. However, the office sector provided an uplift of 6.3% over the previous book value, supported by premium towers built throughout Melbourne and Sydney. Both locations are experiencing record rates for low vacancies.
Mirvac Continues to Grow
In a time of scandals and domestic housing issues, Mirvac continues to remain mostly successful, as Australia's second-largest office manager, with around $15 billion in assets under management. The low-CAPEX and growing portfolio help the company to attract customers who would typically prefer longer leasing periods on their property.
Mirvac has also maintained occupancy levels in the retail division of its business at around 99.2% with annual turnover rates growing at about 2.7%. Specialty sales, which track the health of smaller retailers were up by another 2% this year, according to Mirvac.