SYDNEY--Stockland forecast another year of earnings growth as it progresses major residential projects, even as higher interest rates start to sap property demand and lead developers to offer bigger incentives to secure sales.

Stockland said it expects funds from operations per security of between 38.0 Australian cents (26.9 U.S. cents) and 39.0 cents in the 12 months through June, 2027. If achieved, that represents a 4.3% rise at the midpoint of the range compared to 36.9 cents reported for the prior year.

"We expect the growth in other parts of our business to more than offset a lower Masterplanned Communities funds from operations contribution in FY27," Chief Executive Tarun Gupta said.

Australian housing demand historically shows a strong correlation with movements in interest rates, which have risen three times since January as the central bank seeks to tame a resurgence in inflation caused by the Middle East conflict. Stockland saw enquiries for its Masterplanned Communities peak in the first quarter of the 2026 fiscal year, while net sales topped out in the three months through December.

Still, policy changes have provided some support with the federal government's first-home buyer scheme encouraging more people to get a foot on the property ladder. Migration and a tight jobs market continue to add to demand, with Stockland pointing to a structural shortage of housing supply.

Analysts have debated whether the federal government's tax changes to improve housing affordability will benefit homebuilders. The changes are designed to insulate investor demand for new homes, as they will continue to allow them to be negatively geared. Still, some analysts warn the shakeup risks souring sentiment toward the property market broadly.

Stockland provided the forecast alongside an annual net profit of A$994 million for fiscal 2026, up from A$826 million a year earlier. Revenue totaled A$3.59 billion, up 15%. Stockland had earlier declared a final dividend of 16.2 Australian cents.

Stockland forecast a total dividend of 25.2 cents in the new fiscal year, in line with the fiscal 226 payout.The company aims to pay out between 60% and 80% of funds from operations as distributions.

Management is targeting between 7,300 and 8,300 residential lot settlements in the 2027 fiscal year, and a development operating profit margin of around 20%.

The company settled 8,902 residential lots in the Masterplanned Communities division during the 2026 fiscal year, up 30% on the prior 12 months. That beat guidance of 7,500-8,500 settlements affirmed to investors as recently as the end of April.

Turning to its logistics business, Stockland said the portfolio's funds from operations rose by 8.1% in the 12-month period to A$179 million on a comparable basis.

Stockland is among companies seeking to ride the boom in artificial intelligence by becoming involved in the construction of data centers. In March, the company established a partnership with EdgeConneX to develop, own and operate data centers in Australia.

In its Workplace business, Stockland said funds from operations fell by 1.0% to A$114 million across the year on a comparable basis, while funds from operations in its Retail division rose by 3.1% to A$334 million.