Japanese forestry giant Sumitomo Forestry Group has acquired 51% of Australia’s largest residential builders – with the $115m acquisition eventually leading to a full takeover of Metricon Homes, which built 4,000 houses across Victoria, NSW, Queensland, and South Australia last year.
The latest acquisition adds to the conglomerate’s growing Australia portfolio, which already includes Henley Properties —Metricon’s largest competitor—the Scott Park business in Western Australia and Wisdom in NSW—with Sumitomo now looking to spend $1.2 billion on build-to-rent projects in Brisbane, Canberra, Melbourne (and Auckland too).
Wood Central understands that privately owned Metricon Homes, which prides itself “on building all its homes with concrete slabs and timber frames,” will continue to operate as a standalone entity. According to Michael Duggan, Metricon’s CEO, the new partnership will come after “months and months of negotiations.”
“This acquisition enables our group to expand the business areas in each state, establishing Sumitomo Forestry as the number one builder in Australia and, most importantly, allowing us to make a substantial contribution to the provision of social infrastructure,” said Yasuhiro Odagano, Sumitomo Forestry Australia’s Managing Director: “Sumitomo Forestry Group’s housing starts for single-family homes in Australia will exceed 7000 units per year.”
The new deal comes as several of Japan’s largest builders—including Seiksui House—pile into the Australian (and North American) real estate markets as a hedge against Japan’s sliding housing market, which has seen 2024 housing starts shrink to half of 1994 levels.
“Metricon has worked hard over the past 24 months to return the group to its position of strength, and we are ecstatic that this work has resulted in establishing such an important partnership with Sumitomo Forestry,” according to Mr Duggan, who recently secured its largest contract to date, to build a 483-home project in the Everyone’s Place consortium with the Queensland Government and its Housing Investment Fund.
“This partnership enhances Metricon’s readiness to respond to the opportunities in the Australian housing market.”
Metricon is Australia’s largest builder for the ninth year in a row
Last week, Metricon landed the top spot on the HIA-COLORBOND Steel Housing Report; it’s the ninth year in a row that its housing (3,894 starts) and apartment (3,294 units) divisions have taken first and third place in the annual list of top residential builders, respectively.
“Low levels of unemployment and strong population growth have driven ongoing demand for new homes, despite the increase in the cost of borrowing and a decline in household consumption,” according to Tim Reardon, HIA’s Chief Economist.
“Leading indicators suggest that the building volume is set to increase in the second half of 2024.”
“Increasingly, the outlook for home building is dominated by local factors such as the price of land and state government taxes. For this reason, a recovery in building activity in NSW appears set to lag all other jurisdictions. At the other end of the spectrum, Queensland, WA and SA appear poised to see an increase in building activity.”
“Population growth through the pandemic and a return of overseas migration have stabilised building levels in 2023-24 similar to that seen immediately before the pandemic. This bodes well for a more stable return to building activity in future years.”
About Sumitomo Forestry
Sumitomo Forestry is part of the Sumitomo Group conglomerate. Currently, the company controls 40,500 hectares of forest in Japan, which it is looking to increase as part of its MISSION TREEING 2030 strategy to fully decarbonise its operations.
Sumitomo began harvesting its own timber in 1691, making it the world’s largest timber harvesting company still in operation to meet the needs of the copper smelter. In 1894, the company began planting forests for harvesting, with the logging business spun off in 1898 to become a separate business unit.
Earlier this year, the conglomerate announced plans to launch the world’s first wooden satellite in space, known as the LignoSat probe. The satellite will be made out of magnolia wood, an ideal alternative to earth-polluting metals used in satellites.
- To learn about Sumitomo Forestry’s plans to use “2 x 4” mass timber units to deliver social and affordable housing at scale, click here for Wood Central’s special feature.
