Arvida says average resale margin still pushing higher
By Rebecca Howard
Sept. 18 (BusinessDesk) - Arvida Group said it is seeing no impact from changes in the housing market as its average resale margin continues to push higher.
The retirement village operator said it had completed 136 sales of occupation rights agreements by the end of August, among both new stock from completed developments and the regular turnover of its units. Inventory remains low at 2 percent of existing units and Arvida said it is on track to deliver 111 new units in the current financial year to March 31.
"We are nearing the half-year and the business is performing significantly above last year," chief executive Bill McDonald said in an investor update. The half-year ends Sept. 30 and the results will be released. Nov 27.
The average re-sale margin for the period that ran from April to the end of August was 23 percent, up from 20 percent in the prior financial year, chief financial officer Jeremy Nicoll told BusinessDesk.
In the first quarter of the current financial year gains from ORA sales were up 130 percent on the year at $5.9 million. A further $4.3 million was delivered in July and August, the company said.
An occupation rights agreement allows people to occupy a residential unit within a retirement village but the unit remains the property of the operators.
This has allowed operators to benefit from rising house prices as they onsell the occupation rights. ORAs for Arvida's new units at Aria Bay are selling at an average price of $1 million and $600,000 at Park Lane.
The housing market, however, has been cooling as government efforts to restrict the sale of residential property to foreigners and encourage new construction combined with Reserve Bank-imposed mortgage lending restrictions and tighter lending criteria.
Arvida said it wasn't feeling the pinch "with no sign of impacts from any changing property market conditions."
The latest data from the Real Estate Institute also pointed to signs of life in the property market after the Reserve Bank eased restrictions on highly-leveraged mortgage borrowing and expected higher interest rates didn't emerge. The number of houses sold nationally rose to 6,216 in August, 3.1 percent more than a year earlier, as increased turnover in the provinces made up for fewer deals in Auckland and Wellington.
Arvida shares last traded up 0.8 percent at $1.34. They have gained 4.7 percent so far this year.