By Aimee Chanthadavong

Property group Stockland said it’s on track to achieve its 7 per cent earnings per share growth in 2010-11.

Speaking to Retailbiz, a Stockland spokesperson said the company’s $2.5 billion retail development pipeline is underpinning the company’s commercial property growth strategy.

“It will substantially enhance the quality of our retail asset base and enhance the quality and security of earnings over coming years,” the spokesperson said.

Major developments are taking place at its Merrylands, Townsville and Shellharbour sites. Its Wetherill Park is set for a $110 million stage one redevelopment while Merrylands is currently undergoing a $395 million redevelopment.

At the company’s investor day, commercial property CEO John Schroder said the strategy is to develop larger, higher quality retail assets. The company found that high quality retailers are less volatile and have higher risk-adjusted returns.

“Stockland’s current portfolio is primarily sub-regional centres anchored by discount department stores. As we move toward delivering larger regional centres, we will bring in a higher quality retailer mix that will complement our centres,” the spokesperson said.

“For example, the introduction of Myer to Stockland Townsville and Stockland Shellharbour will require a better calibre mix of specialty retailers, including higher end quality fashion and retailers to meet the market.”

Retail occupancy remains high at approximately 99.5 per cent with only 35 vacant speciality shops.

“Historically, Stockland has held high occupancy levels in its centres over recent years and we do not anticipate this changing in the future. This is because we actively manage our portfolio by identifying tenants at risk of not renewing, keeping close to and understanding our retailer’s requirements for new stores and pre-emptively planning and leasing space to minimise our vacancies,” the spokesperson said.

Overall, market environment and fundamentals have underpin investment in retail, including the federal stimulus packaging that saw a retail growth in sales year-on-year between March 2009 from 3 per cent peaking at 6 per cent in September 2009. It continues to remain strong post-stimulus.

"We’re expecting Christmas trade to be broadly comparable to last year. However with the mood of consumers still quite subdued, feedback from retailers is that continued discounting and wide-spread promotion will be necessary to encourage spending,” the spokesperson said.