ACCC probes Lendlease $1.3b residential development sale to Stockland amid fears of higher prices, less lots

The Federal competition watchdog has refused to rubber stamp Stockland’s plans to take control over 12 big residential developments from battling rival Lendlease.

The Australian Competition and Consumer Commission has called for submissions from the public after raising concerns that the $1.3 billion deal could increase prices and reduce lots supply in Victoria, Queensland and WA.

Stockland, which is selling lots now in its Amberton Beach development in Eglington, wants to buy Lendlease’s stake in the nearby Alkimos Beach and Alkimos Vista residential developments. Lendlease is developing these projects in a joint ventures with State-owned Development WA.

Backed by busy Thai-listed residential and commercial developer Supalai, Stockland also wants to buy projects near Wollongong and on the outskirts of Brisbane and Melbourne.

Lendlease had been hoping the ACCC would approve the deal this week as it tries to offload $4.5b of assets in a bid to reduce debt and win back support from investors.

ACCC commisioner Liza Carver said her agency thought the proposed deal could remove one of Stockland’s “closest and largest competitors” in the supply of residential master planned communities in north-west Perth, the Illawara, Moreton Bay and Ipswich.

“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.

“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.”

She said the concerns were strongest in the Illawara, where the proposed acquisition would bring together the two largest master planned community projects in an already highly concentrated market.

Residential master planned communities can be long-term holders of capital given they involve designing hundreds of lots on vacant land and then riding markets through real estate, economic and investment cycles.

The ACCC said it had not reach a concluded view on the deal and called for public submissions to be filed by July 18.

The watchdog said Supalai had investments in various masterplanned communities in WA, Queensland and Victoria with developers including Peet, Satterley, Stockland and Mirvac.