Westfield owner Scentre talks up plans to plug housing gap via malls

That gives the mall owner scope for large-scale residential development of more than 2100 and 2000 dwellings respectively at those two sites.

As well, Westfield Warringah in Sydney has been declared a state significant development in March with the potential to create around 1500 dwellings following a NSW Housing Delivery Authority process. That puts a potential 5600 dwellings in Scentre’s residential pipeline.

But Rusanow said the company is running the rule over all 42 malls it owns and manages throughout Australia and New Zealand, to gauge their potential for further development.

“It’s fair to say we’re working on everything because we see there’s a tremendous long-term growth opportunity,” he told The Australian Financial Review.

“If three centres are delivering 5600 [dwellings], then for 42 centres, do the math. It’s going to be tens and tens of thousands of potential [dwellings].”

Creating appealing destinations for shoppers and consumers so that they will spend more time in Westfield malls remains Scentre’s core business. But its executives, led by Rusanow, are seizing firmly on the opportunity to generate even more value from the 670 hectares of land the $21 billion company controls.

Around and above popular malls, that land is well-located, typically close to major transport nodes, and through rezoning it can directly plug into the national housing shortage.

That is what Rusanow neatly terms a “symbiotic” relationship between shopping malls and surrounding housing.

“Why we’re keen on this is because we believe that we’re enhancing this concept of a town centre by making sure that whatever we put there – from a residential or from another usage point of view – is actually in service of the business that we have today,” he said.

To drive those mooted housing developments, should they ultimately be approved, Scentre is already in discussions with prospective local and offshore capital partners.

“The overwhelming message that I’ve received – I’ve personally been in these meetings – is the [residential] living sector thematic is the one they want to invest in.”

The update on Scentre’s housing ambitions came as Rusanow announced an upgrade in Scentre’s distribution guidance for the second half of 2025 to 8.905¢ per security, representing 3.5 per cent growth over the prior corresponding period.

Distributions in the first half were 8.815¢, up 2.5 per cent. Scentre’s financial year aligns with the calendar year.

That upgrade is testament to the success Scentre is achieving across its mall portfolio, where occupancy is 99.7 per cent, the highest level since 2017. Over the first half, the landlord counted 340 million customer visits in the first half, up 3 per cent on the same period last year.

That flow of customers helped boost retailers’ sales at Westfield malls to $13.8 billion, up 2.9 per cent over the six months to June. Sales among the specialty retailers – a crucial component of the malls’ offering – were 3.9 per cent higher than the previous corresponding period.

Funds from operations (FFO), the standard earnings measure in the commercial property sector, rose 3.2 per cent to $587 million, representing 11.28¢ per security.

Its statutory after-tax profit jumped almost 94 per cent to $782.2 million, a figure that takes into account unrealised portfolio revaluation gains of around $177 million.

Scentre has reconfirmed its full-year target for FFO is 22.75¢, representing 4.3 per cent growth for the year. The upgraded distribution for the second half would result in full-year 2025 distribution growth of 3 per cent.

Scentre has also signalled its interest in tapping into fresh capital for its ambitious development plans by selling down stakes in some malls. In July, it sold a quarter interest in a major Brisbane mall to a Dexus-run fund for $683 million.

That transaction is in line with the company’s long-held view that the most effective way of raising equity is to sell down some interest in some malls rather than pursuing an equity raising.