28/01/2011 - 00:00

Diploma adds $155m to project list

28/01/2011 - 00:00


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PROJECTS in the Perth CBD and Midland worth a collective $155 million have brought the total value of developments on the books of listed property group Diploma Construction to $560 million.

Diploma adds $155m to project list

PROJECTS in the Perth CBD and Midland worth a collective $155 million have brought the total value of developments on the books of listed property group Diploma Construction to $560 million.

The recent project announcements follow the purchase of an 872 square metre site on the corner of Plain Street and Adelaide Terrace in November, which Diploma said was earmarked for a $60 million development.

But the big news has failed to ignite share market interest in Diploma, reflecting a general malaise that has emerged across the listed property sector since October compared to the wider market indices such as the ASX200.

Trading at about 30 cents a share, Diploma stock is sitting well below the highs of around 50 cents at the start of 2010, when it was clearly outperforming the overall market at that time.

The underperformance, though, is in line with others in the sector where prices have languished in recent months.

National players such as Peet and Mirvac, which issued a negative assessment of its regional projects (see story below), have experienced similarly subdued share prices, along with the rest of the sector.

Bucking this trend is another WA group, Cedar Woods. Its shares have performed strongly since the start of the year, rising from about $3.50 each to $4.10 in the past fortnight.

Shares in another WA developer, Port Bouvard have also been flat for months. The company announced late last year the sale of land at Melros for $4 million, its third such deal for the year in a series of transactions that raise almost $14 million to pay off debt.

This week, Diploma Group said it had secured a 2,634sqm site in Midland for a $25 million, 60-apartment mixed-use complex, its second significant development in the eastern metropolitan town over the past year.

Diploma is currently building the Foundry Apartments in Midland, and has reported 85 per cent pre-sales, with construction expected to be complete midway through the year.

Last week, Diploma Group was given the green light to construct $130 million worth of new projects in the CBD, with the City of Perth approving apartment project plans at Pier Street and Adelaide Terrace.

At Pier Street, Diploma received approval for its $80 million Department of Housing joint venture, which will deliver 161 apartments and 550 square metres of commercial space.

And at Adelaide Terrace, Diploma got the go ahead for the $50 million 79-apartment iSpire apartment project, which will include a fully automated five-level car stacker system.

Construction at Pier Street is due to begin in May. The project has a June 2013 scheduled completion date.

Work at 176 Adelaide Terrace will commence in April, with a scheduled completion date of June 2012.

Diploma chief executive Nick Di Latte said the company was taking advantage of the opportunity presented by significant urban renewal in Midland.

He said the Foundry Apartments in the foothills town demonstrated that the market has a clear appetite for apartments.

In other property news, private Belmont-headquartered specialist property funds management group Otan plans a $21 million development on a 1.18-hectare Railway Parade site in Queens Park, formerly home to Coronation Hotel.

Otan purchased the land at 148-154 Railway Parade from EGB Nominees for $3.6 million and its development, called Q Central, has received planning approval for a combined residential and commercial complex.

The group has also purchased a 3397sqm site is at the corner of Salvado Road and Station Street, which is part of Centro North in Subiaco, and has a housing development at South Beach Housing near Fremantle.



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