Mirvac the latest residential developer to jump on land lease bandwagon

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Mirvac CEO Susan Lloyd-Hurwitz said the country’s largest diversified developer is looking to “press the button” and follow Stockland, Ingenia Communities, Lifestyle Communities, Aspen Group, Palm Lake Resort, Serenitas and Hometown Australia into land lease developments.

Land lease developments traditionally offer affordable accommodation, and have been profitable for operators.

“It’s a very compelling investment proposition and a very good customer proposition,” Susan told The Australian Financial Review after Mirvac announced a net profit of $565 million for the six months ended 31 December.

“We clearly have all the skills in-house to be able to design the right product at the right price point, experience in building community, and we have the land.”

One of the pilots will probably be at Smiths Lane, a 240-hectare master planned community at Clyde North in Melbourne’s outer south-eastern suburbs. The company has not decided on the second location. Full details will be made public by the time of Mirvac’s full-year earnings announcement in August.

In October 2016, Queensland operator Halcyon started building Australia’s first over-50s golf and country club after buying 46 hectares of land at Mirvac’s Gainsborough Greens community at Pimpama, 50km south of Brisbane and 30km north of Surfers Paradise.

It was only in December 2020, that Mirvac sold a site in its Woodlea master planned community in Melbourne’s west, with capacity for 180 land lease homes, to James Kelly’s Lifestyle Communities.

“Over the last year, we’ve gone ‘No, why would we do that? Let’s do that ourselves’,” Susan said.

Stockland bought into the sector in July last year with the acquisition of Halcyon.

In November, LLC operator Ingenia Communities spent $270 million to buy a portfolio of lifestyle communities from operator Seachange in southeast Queensland. It bought 19 sites in FY21 and last month purchased Oakland Village in Beaudesert, an hour from Brisbane and the Gold Coast, for the 16th of 20 acquisitions in this financial year’s $552 million expansion plan.

Susan said Mirvac had no intention of buying established operators, but would look to build up its portfolio of assets, as it has done in office, industrial and build-to-rent.

“The price people are willing to pay for the goodwill in those companies is fairly extraordinary,” she said.

“We have all the ingredients that we need – there are things we have to learn, probably, but I think we have most of the ingredients.”