Australia’s chief competition regulator has expressed concern about the planned acquisition of multiple Lendlease residential community projects in four Australian states by competing developer Stockland, working together with Thai multinational Supalai.
Lendlease Group Ltd (ASX:LLC) runs 16 residential masterplanned community projects in New South Wales, Queensland, Victoria and Western Australia, with 12 of these set to be acquired by Stockland and Supalai as part of a joint venture, the Stockland Supalai Residential Communities Partnership Pty Ltd (SSRCP).
But the Australian Competition and Consumer Commission (ACCC) has raised preliminary concerns about the impact this could have on four specific areas: Illawarra, North West Perth, Ipswitch and Moreton Bay, with Commissioner Liza Carver suggesting the acquisition removed one of Stockland’s closest competitors for supply of such projects.
“The ACCC is concerned that the proposed acquisition may increase Stockland’s incentive
to raise the price, delay the supply, or reduce the quality of housing lots in these regions, to
the detriment of prospective homeowners,” Ms Carver said.
She added that given the tightness of competition between Stockland and Lendlease already, the buying up of these projects would make it even more difficult for developers to meet expectations, based on current market feedback.
“We are concerned that other developers of masterplanned community projects may not be
able to compete sufficiently with Stockland after the acquisition in some regions,” Ms Carver
said.
“These preliminary concerns are strongest in the Illawarra region of New South Wales where
the proposed acquisition would bring together the two largest masterplanned community
projects in an already highly concentrated market.”
Additionally, the ACCC is looking into the possibility that the proposed deal between Stockland and Supalai might increase the risk of anti-competitive coordination by developers connected to the pricing, supply, and/or quality of masterplanned community projects.
However, the Commission stressed that these concerns are only at a preliminary stage, and invited submissions in response to these by 18 July 2024.
Stockland announced in December 2023 that it had entered a joint venture with Supalai – a subsidiary of Supalai Public Company Limited – to acquire the 12 residential projects for approximately $1.3 billion, with the deal comprising 27,600 lots across the four states.
Leandlease has been trading at $5.72.