Daiwa House Nine-Month Profit Soars 30% to $1.5B

Daiwa House Industry reported a net profit for the fiscal nine months to December of JPY 216.2 billion ($1.5 billion), up 30.1 percent year-on-year, as the Japanese developer’s net sales reached a record high.

The blowout earnings were due in part to Daiwa House’s $407 million divestment of its resorts division and the sale of investment units in Daiwa House REIT, Japan’s biggest homebuilder said in results released late last week.

Net sales during the period rose 9.8 percent year-on-year to an all-time high of JPY 3.76 trillion, increasing for a third straight year, as operating income shot up 28 percent to JPY 284.9 billion. Sales were led by the logistics, business and corporate facilities segment with JPY 965.2 billion, up 28 percent year-on-year.

“Net sales and operating income increased due to steady progress of construction works already acquired, aggressive expansion of the built-for-sale business of industrial parks by optimally leveraging a land property, and sale of development properties, mainly logistics facilities,” Osaka-based Daiwa House said.

Hotel Operations Perk Up

In the commercial facilities segment, which includes urban hotels under the Daiwa Roynet chain, sales rose 6 percent year-on-year during the nine months to JPY 854.1 billion as operating income climbed 7.2 percent to JPY 103.1 billion.

The occupancy rate at Daiwa Roynet increased by 4.6 percentage points to 88.1 percent versus the comparable period a year earlier, while the average daily rate rose from JPY 8,956 to JPY 11,783.

The steady progress of occupancy and ADR in the urban hotel business, which had been hit hard by COVID-19, contributed significantly to the increase in net sales and operating income, the developer said.

The overseas business centred on US single-family houses saw a 9 percent jump in sales to JPY 339.2 billion as operating income slid 16.5 percent to JPY 19.2 billion.

“Overseas, US deliveries progressed steadily, exceeding results for last year with orders received,” Daiwa House said. “As a result, net sales increased in this segment, but operating income decreased with lower gross margin ratio partly due to an increase in the proportion of built-for-sale business in Japan and the impact of sales promotion measures in the US when interest rates rose.”

British Expedition

In October, Daiwa House announced a joint venture with Australia’s Lendlease to develop and sell 259 new apartments across two new buildings at the Elephant Park mixed-use project in South London. Sydney-based Lendlease will construct the new homes, which have an estimated end value of £250 million ($317 million), and retain a 25 percent interest in the project.

“I am very excited right now,” said Daiwa House president and CEO Keiichi Yoshii. “This is because this is Daiwa House’s first project in the UK.”

Daiwa House and Lendlease previously partnered on the delivery of a 41-storey mixed-use building in Manhattan’s Upper West Side near Columbia University, and the companies recently began work on a build-to-rent apartment development in Melbourne.