Developers expect a mixed year ahead

Despite the downturn in the residential property sector during the past eight months, three Western Australian developers have posted increased profits for the year to June.

West Perth-based Cedar Woods Properties Ltd this week reported a net profit of $21 million, up 11 per cent on last year and slightly higher than its original forecast.

Similarly, Peet Ltd increased its net profit after tax by more than 5 per cent, to $48 million, while apartment developer Finbar Group Ltd more than quadrupled its net profit ($12.2 million) in its preliminary final report.

Perth-based Aspen Group bucked the trend, reporting a 4 per cent fall in net profit to $70.9 million.

However, underlying earnings for the group, excluding unrealised gains on property values, was up about $10 million to $43.8 million.

Most of these developers reported a mixed outlook for 2009, with weakened residential activity expected to continue.

Cedar Woods said adverse market conditions in WA might affect its ability to replicate its 2008 profit next year.

The company will start construction of its Wellard land syndicate, near Kwinana, in 2009, as well as a 78-lot expansion of its Helena Valley estate.

However, Cedar Woods said interest in two new Melbourne projects had been strong, with 80 per cent of the 2009 sales target for Melbourne already accounted for in unconditional presales.

Peet also has a strong presence in Victoria and Queensland, with WA projects making up just 31 per cent of earnings before interest and tax.

The company's chief executive, Brendan Gore, said that while underlying demand remained strong, consumer sentiment was unlikely to recover in the short-term.

"Peet Ltd expects to be operating within a challenging Australian residential market in the year ahead, with clear signs that the difficult macroeconomic environment will persist in financial year 2009," he said.

South Perth-based Finbar said the market downturn would provide buying opportunities as more land came up for sale, and said given the company's strong cash position and pre-sale support for projects, it would be actively seeking joint ventures and acquisitions.

Finbar's cash at hand at June 30 was $28 million, up from $9 million.

The company also said settlements from the its Ceresa and Domus apartments over the past two months had provided early revenue for the new fiscal year, with another three projects expected to reach completion from January onwards.

Aspen expects to maintain its distribution rate of 15.5 cents per stapled security this financial year, despite a fall in profit.

It said strong rent returns from its Perth and Adelaide office towers, as well as returns from its funds management business, would underpin revenue growth.