Leighton Properties Plans Expansion Into Mining Areas, Asia

Leighton Properties, the real estate arm of Leighton Holdings Ltd. (LEI), plans to expand developments in resource-rich areas of northwestern Australia and northern Queensland state and will seek opportunities in Asia.

“We’re starting to investigate property development opportunities in the resource sector including northwest Australia, which has very strong mining growth, and in north Queensland, around oil and gas investments,” Mark Gray, managing director of Leighton Properties, said in an interview in Sydney yesterday. “Ultimately, where we can leverage value to Leighton Group operations,” the unit may expand in Asia within five years, he said.

Leighton Holdings, Australia’s largest construction company, has infrastructure, construction and mining operations in Asian countries including India, China, the Philippines, Cambodia and Malaysia. The group this week said it would sell its Thiess Waste Management Unit to Germany’s Remondis AG & Co. for A$218 million ($222 million) and divest other assets as part of its plan to recycle capital into its core activities.

The properties business remains a major part of the group’s business, Gray said.

Leighton Holdings shares have lost 16 percent this year, compared with a 1 percent gain in the benchmark S&P/ASX 200 index.

Leighton Properties -- which includes the group’s 50 percent interest in Springwood, Queensland-based developer Devine Ltd. (DVN) -- swung to a profit of A$1 million in the six months ended Dec. 31, from a A$20 million loss a year earlier. The parent company reported net income of A$340 million compared with a A$216.7 million profit in the corresponding period a year ago.

Housing Rebound

The company is betting on a recovery in the Australian housing market with plans to build about 3,400 apartments in cities including Sydney, Melbourne and Brisbane, and expects to increase its investments in the area further, Gray said.

Home prices in Melbourne slumped 6.6 percent and Brisbane 4.7 percent in June from a year ago, compared with a 3.6 percent drop across Australia’s eight state capitals, according to figures from researcher RP Data.

“The current short-term downturn will turn quite quickly when economic conditions improve,” Gray said. “We still have a very significant under-supply of housing in Australia, and we have a growing population.”

To contact the reporter on this story: Nichola Saminather in Sydney at nsaminather1@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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