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Stockland Corporation SWOT & PESTLE Analysis

Last Updated : 17 Jun, 2017

OVERVIEW

Name of the Company: Stockland Corporation Ltd.

Business Sector: Construction, Realty

Operating Geography: Australia and NZ, United Kingdom

About the Company: Stockland corporation was founded in 1952. Initially it was named as Stocks and Land. It is headquartered at Sydney, Australia. It deals with the development and management of retail, office, industrial and office park properties in mainland Australia, UK and New Zealand. It also offers services like property trust management and property management. It has a total of 1383 employees as of 2015.

Revenue: AU $2,087 million - FY15

SWOT & PESTLE Analysis

The SWOT Analysis for Stockland Corporation Ltd. is given below:
Strengths
Weaknesses
1. It is the largest diversified property company in Australia.
2. It has a very strong control and influence across the value chain.
3. Superior relations with the stakeholders.
4. Sustainability and environmental friendly business outlook.
5. It has a high operational efficiency.
1. It has substantial presence in the Gold Coast market which has sunk to its lowest level in over 30 years.
Opportunities
Threats
1. It hasn’t ventured yet into ‘asset and property management’ and ‘re-development’ domain in the residential space
3. Improving home sales and rising property prices in Australia
1. Its biggest threats are its national and international competitors.
2. Technology changes affect the consumers spending habits and lifestyle. It also affects the demand for traditional products.
3. Regulatory changes have an impact on the business of Stockland Corporation Ltd.
4. Inflation has its effect on the profits
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Strengths

1. It is the largest diversified property company in Australia: Stockland is the largest diversified property company in Australia. It has its properties at Mainland Australia, New Zealand and the United Kingdom. It has a huge presence in eastern Australia covering Sydney, Canberra, Brisbane and Adelaide. It also has its presence in Perth. This gives Stockland an edge over its competitors. It has 40 shopping centers, 21 logistic centers and business parks, 63 residential communities, 63 retirement villages and 10 office buildings, which are worth $5.5bn, $1.6bn, $20.4bn, $1.5bn and $1bn respectively. The sheer numbers speak volumes of the company.

2. It has a very strong control and influence across the value chain: It has a very strong control and influence across the value chain. Stockland does vertical integration by working on areas like building materials and building technologies. It also offers downstream services like Child care, equipment leasing etc.

3. Superior relations with the stakeholders: Stockland has superior and well established relationship with its stakeholders. It engagement approach with the stakeholders is very well received by the stakeholders. In this approach, Stockland receives monthly reports and updates on the issues of the stakeholder and then addresses those issues and concerns. In this way, it nurtures the relationship with its stakeholders.

4. Sustainability and environmental friendly business outlook: Stockland has a very environmental friendly approach to its business. It was the first Australian company to issue green bonds to fund greener projects. It was awarded Real estate super sector leader on the S&P Dow Jones Sustainability Index 2013-14. It also achieved the first green star rating for a Retirement living village.

5. It has a high operational efficiency: It has a very high operational efficiency and effectiveness. There was an 8% reduction in the overheads in the year 2014.98% of its employees consider it as a safe place to work and there are only 6.2 injuries per million hours worked.

Weaknesses

1. It has substantial presence in the Gold Coast market which has sunk to its lowest level in over 30 years: It has a substantial presence in the gold coast market , which has sunk to its lowest level in over 30 years.

Opportunities

1. It hasn’t ventured yet into ‘Asset and property management’ and ‘Re-development’ domain in the Residential space: It hasn’t ventured yet into ‘Asset and property management’ and ‘Re-development’ domain in the Residential space which are offering promising returns.

2. Improving home sales and rising property prices in Australia: The Sydney suburbs is leading the property boom with prices of property rising at tremendous rate of 42% per year. Stockland is headquartered at Sydney. This gives Stockland ample space to expand in the suburbs of Sydney.

Threats

1. Its biggest threats are its national and international competitors: Its biggest threats are its national and international competitors. The case in point is a Singapore based Fraser Centre point Ltd, which took over Australand in an all cash bidding against Stockland. This lead Stockland to lose an opportunity to acquire a domestic company.

2. Technology changes affect the consumers spending habits and lifestyle. It also affects the demand for traditional products.

3. Regulatory changes have an impact on the business of Stockland Corporation Ltd.: Regulatory changes have an impact on the business of Stockland Corporation Ltd.

4. Inflation has its effect on the profits: Inflation has its effect on the profit. The rising prices of real estate in Australia is eroding the profits of Stockland, forcing it to reduce its property spaces.

Stockland Corporation Ltd. SWOT analysis has been conducted and reviewed by senior analysts from Barakaat Consulting.

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The PESTLE Analysis for Stockland Corporation Ltd. is given below:
Political
Economical
1. Australian government imposed 3% more surcharge on the non-resident buyers of real estate property.
2. New tax system for property buyers of China.
1. The Reserve Bank of Australia reduced the interest rate fearing the deflation.
2. The growth of real estate sector was negative in the month of March after years of great growth.
Social
Technological
1. Baby boomers turn 75 in 2015 and there will be an increase need for villages1. Inefficient and obsolete system that is ineffective to compete with the competitors.
Legal
Environmental
1. Call for strict mandatory codes1. Stockland is the Australia’s first issuer of green bonds to fund greener projects.
2. Sustainability is a key aspect at Stockland
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Political

1. Australian government imposed 3% more surcharge on the Non-resident buyers of real estate property: The Australian government imposed 3 percent surcharge to foreign property buyers who buy apartments, houses and vacant residential-zoned land in Victoria. This will come into effect from July 1st, 2014. This will raise about $330mn to the exchequer in the upcoming four years. In addition to these, an absentee land tax of 0.5% is levied on the foreigners who have their property in Australia, but don’t occupy it until 2016. This will have a tremendous effect on the sales of residential spaces of the Stockland Corporation Ltd.

2. New tax system for property buyers of China: Australia also plans to impose a new tax on the Chinese property buyers in Australia real estate. This was a part of the international backlash against wealthy Chinese property investors. Australia is following the footsteps of Honk Kong and Singapore to check the intrusion of heavy Chinese property buyers into the domestic market. This also will have serious effect on the sale of the Stockland properties.

Economic

1. The Reserve Bank of Australia reduced the interest rate fearing the deflation: The Reserve Bank of Australia has slashed the interest rates as the risk of deflation deepens. The bank has just joined the league of a dozen other monetary powers. This will make people to take credits at a cheaper rate and then buy property like retail, houses, or mere land. This decision by the Reserve bank would propel the sales of the Stockland Corporation Ltd in a big way.

2. The growth of Real estate sector was negative in the month of March after years of great growth: The Australian Real estate investment trust has grown tremendously in the past few years. The return on the investment last year was over 25 percent which was more than that of returns on some equities. Though the trust has shown a negative growth in the month of March, but it is still a promising investment and is bound to attract a lot of capital into the sector, thus benefiting the Stockland Corporation Ltd.

Social

1. Baby boomers turn 75 in 2015 and there will be an increase need for villages: This is the year when the baby boomers are going to turn 75 years. This demands for new villages and isolate places for them. New retirement units should play to Stockland’s strong housing expertise. Stockland reported an increase in profit by 13% and increase in turnover by 18% in the ‘retirement living’ sector in year 2013. The business seems promising and Stockland commits to invest $1bn in the retirement living business. Sources said a tentative approach was made to Stockland with regards to its retirement division in the past fortnight. The approach was very informal but investment banking advisers were involved.

Technological

1. Inefficient and obsolete system that is ineffective to compete with the competitors: Listed diversified property group Stockland has embarked on a technology overhaul program aimed at stripping out inefficiencies and giving the firm a leg up on its rivals by its completion at the end of 2014. Stockland’s chief information officer Tony Clasquin said the existing systems had become unviable and that a company-wide program, including a major undertaking to deploy a new core manufacturing system, was essential if the business wanted to lead the market. Upon taking over from previous chief executive Matthew Quinn at the beginning of the year, Stockland CEO Mark Steinert called out unsatisfactory technology systems as a key area that needed to be improved. He bemoaned the fact that decision-making processes in the company were too bureaucratic, with decisions going through too many layers of management. He demanded systems that let him better plan and monitor projects and said the systems needed to be better equipped to share knowledge and allocate resources.

Legal

1. Call for strict mandatory codes: Frasers Centre point Ltd. offered to buy Australian developer Australand Property Group for A$2.6 billion ($2.4 billion) in the Singapore real-estate company’s biggest proposed acquisition, trumping a bid by Stockland. Frasers offered A$4.48 per share, Sydney-based Australand said today in a regulatory filing, compared with Stockland’s A$4.43 all-share bid. Shares of Australand, whose board said it intends to recommend the offer in the absence of a superior proposal, posted their biggest gain since December 2012 in Sydney. Frasers shares had the biggest drop in four months in Singapore.

Environmental

1. Stockland is the Australia’s first issuer of green bonds to fund greener projects: Stockland, Australia’s is the nation’s first issuer to sell green bonds to fund more environmental friendly projects. Stockland, will use proceeds from the bond to fund developments with ratings from the Green Building Council of Australia. Green Bonds were earlier issued by World Bank and Unilever in the past. The company priced 300 million euros ($380 million) of so-called green bonds, selling the seven-year securities at a yield 82 basis points above the swap rate, according to data compiled by Bloomberg. The cost switched back into Australian dollars is equivalent to 153 basis points more than the bank-bill swap rate, the issuer said in a statement. Chief Executive Officer Mark Steinert said, “The green bond will enable Stockland to further invest in leading edge sustainable projects".

2. Sustainability is a key aspect at Stockland: Sustainability at Stockland is ensuring that we leave the environment in good shape for future generations. As a property developer, owner and manager we have a unique opportunity to create the right balance of social, environmental and economic conditions for our communities, customers and investors now and in the future. As a recognized sustainability leader, we are committed to setting and raising the standard of leading practice sustainability management and disclosure in the property industry. Our management approach and performance are independently assured annually.

Stockland Corporation Ltd. PESTLE analysis has been conducted and reviewed by senior analysts from Barakaat Consulting.

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