Australia Real Estate: Could residential developers surprise investor expectations for FY27 earnings guidance?

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05 Aug 2026 06:18:15 ET │ 19 pages

Australia Real Estate

Could residential developers surprise investor expectations for FY27

earnings guidance?

CITI'S TAKE

Following our recent upgrade to the housing stocks, one of the key themes

we have picked up on is investor negativity heading into results for the

guidance that will likely be issued by the residential developers. For SGP

particularly, which is our preferred residential name, we highlight the

residential volumes may end up being broadly flat in FY27 against FY26

settlement guidance of 7,500-8,500. They key driver for this will be the

6,721 residential pre-sales as of 3QFY26, as well as potential sales in 4Q26

and FY27. We retain our positive view on residential developers heading into

results, and expect that guidance will be in-line with VA consensus/Citi

forecasts which show flat earnings at group level into FY27, but the stocks

may react positively to this given cautious investor expectations. We retain

Buy rating on SGP and MGR, with SGP our preferred residential exposure.

Australian Real estate

Suraj Nebhani, CFA AC

Howard Penny

Akshit Batra

Buy-side cautious on FY27 earnings guidance for residential developers

— Following our recent upgrade to the housing stocks, we have received a number

of pushbacks on our upgrade, with one of the key concerns being around the

guidance to be issued at the upcoming earnings season. We note that buy-side

investors (we have spoken to) are cautious heading into results and expect FY27

earnings guidance for residential developers to show YoY earnings declines,

primarily on residential earnings weakness driven by lower volumes.

SGP's pre-sales data show Citi/VA consensus forecasts for flat earnings may

prove right — We have flattish earnings forecasts for both SGP and MGR into FY27

and believe investor expectations may prove too cautious. For SGP particularly, our

preferred residential name, we highlight that strong residential pre-sales at 3QFY26

(6,721 lots) puts them in a strong position to have flattish residential volumes against

FY26 guidance of 7,500-8,500 lots (Citi expects ~7,800 lots in FY27). The table

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