Stockland Share Price Tested as Property Values Slip (ASX:SGP)

SGP Share Price - Stockland Corporation Shares

It’s been a mixed market at the open of the week. While the ASX is broadly on the up, many stocks are trading lower.

One of those stocks is Stockland Corporation Ltd [ASX:SGP], a commercial property developer and management firm.

After opening markedly lower, the SGP share price is now trading 1.1% lower. A tough result on the back of some disheartening news.

Property hit and search for a new head

The good news for Stockland shareholders is that their dividend is still in tact.

Management confirmed a 10.6-cent payout per share for the second half of the financial year. Bringing the total dividend for the year to 24.1 cents.

Keep in mind; this may be subject to change. The final figure will be confirmed in August with the release of their full results for the year.

Unfortunately, it is a lower payout than Stockland managed to deliver last year. A factor that comes down to the impact of the pandemic on recent operations. It also relies upon ‘no further material changes in market conditions’, which is far from guaranteed.

And despite their strong defensive position, with plenty of cash on hand, Stockland isn’t out of the woods yet.

As we speak an independent valuation of their property portfolio is underway. Trouble is, the initial signs are pointing toward a 10% devaluation across the board.

Not exactly the kind of news shareholders will want to hear.

On top of that, CEO and Managing Director, Mark Steinert has also announced his retirement.

A decision that certainly wouldn’t have been easy, and comes at an awkward time. With no end date set in stone as well, finding a replacement may take some time.

Suffice to say, it’s an ominous barrage of change at a delicate time for Stockland.

The next step forward

Broadly speaking however, the outlook for Stockland isn’t all glum.

Despite today’s setbacks, the market itself is in a fairly good spot. In fact, Stockland themselves are in a fantastic position to ride this downturn to new highs.

For example, a renewed emphasis on housing support from the government will help. Putting in place programs such as HomeBuilder, to ensure the property market doesn’t collapse.

Furthermore, roughly half of Stockland’s sales are still to first home buyers. A stat that will be extremely pleasing given the ongoing incentives offered to this pivotal cohort of buyers.

All of this is helping lift demand, as Stockland notes:

Following the introduction of these stimulus programs and the easing of social distancing restrictions since mid-May 2020, new enquiry levels in our residential communities have recovered to be above pre-COVID-19 levels.

So, their slight pullback today may not be indicative of more to come. It may even be a good time for investors to consider buying up more stock.

After all, our resident property guru — Catherine Cashmore — believes property isn’t going to crash just yet. We could be on the precipice of another five-year long boom before the real crunch hits.

Don’t take my word for it though, read all about the 2026 property crash, right here.


Ryan Clarkson-Ledward,
For Profit Watch