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Sumitomo is Taking Over Australia’s #1 House Builder —What Next?

Japanese construction giants are now eying Australia's booming building market to make up for a slowing local market.


Tue 01 Oct 24

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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).

Sumitomo is using mass timber to develop mid-rise and high-rise construction projects across the world. (Photo credit: Sumitomo Forestry Co)
Sumitomo is using mass timber to develop mid-rise and high-rise construction projects worldwide. (Photo credit: Sumitomo Forestry Co)

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.”

Foreigners are snapping up old and abandoned houses – and there are about eight million of them across Japan – at incredibly low prices, setting up hotels or renting them cheaply (Photo Credit: Twitter)
Japanese builders are now looking abroad for opportunities as real estate opportunities in the world’s fourth-largest economy sink. (Photo Credit: Twitter)

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.

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Image: Japan Housing Starts, 1989 – 2024, Japan Ministry of Land, Infrastructure, Transportation and Tourism

“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.”

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Metricon is Australia’s largest house builder – priding itself on building (almost) all dwellings out of a concrete slab and timber framing.

“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.

Footage courtesy of @user-bw1cs1xp8u.

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.

Author

  • Jason Ross

    Jason Ross, publisher, is a 15-year professional in building and construction, connecting with more than 400 specifiers. A Gottstein Fellowship recipient, he is passionate about growing the market for wood-based information. Jason is Wood Central's in-house emcee and is available for corporate host and MC services.

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