Basics critical to VW success
STICKING to the basics has ensured Broadbeach-based developer Villa World has delivered a record $43.6 million profit for the past financial year.
Yesterday’s announcement buoyed investors – sending the stock up 3.6 per cent to close at $2.25.
The full-year result was at the top of the range forecast earlier this year of between $42 million and $44 million.
Villa World recorded 1678 sales in the past financial year, 39 per cent higher than FY17.
Queensland projects contributed to 64 per cent of sales, slightly down on the previous period, with strong sales in southeast Queensland and Hervey Bay.
Villa World will carry forward 845 sales contracts, worth $278.1 million, into this financial year.
Managing director Craig Treasure said Villa World has focused on its core business of
marketing land and house and land packages across Victoria, Queensland and NSW.
“That is particularly to the lower end, or more affordable, part of the market,” he said.
“That is what Villa World has always been able to do. Stick to the basics of property and build a very strong performing business out of that.”
Mr Treasure said banks have tightened credit conditions for customers, which meant they could, on average, not borrow as much and it was taking twice as long to gain approval for loans compared to the past. While that had not impacted sales, it did mean Villa World was working harder to ‘qualify’ buyers.
“We don’t want to sell them the property and have them tied up for two months, only for them not to get finance and not to proceed,” he said.
“We are working them to make sure they are aware of the new banking requirements and they will most likely be able to proceed through finance.”
Mr Treasure said he has noticed some buyers struggling to borrow enough to purchase a $450,000 property.
“However, by the same token people looking to buy real estate more expensive than that are now dropping into a lower price bracket.”
Mr Treasure said Villa World’s flagship Gold Coast project – Arundel Springs – has proven popular with firsthome buyers.
More than 170 lots have sold at the 391-lot development since it was launched to the market mid-last year.
“We were fortunate to acquire that property more than two years ago and we are probably halfway through that development,” he said.
“It is a great project for us that will continue for some time.”
He said the Logan corridor continues to be a focus for Villa World, which earlier this year paid $5.4 million for two lots totalling 7.34ha of land at Logan Reserve.
“We have a strong presence in Logan with our Killara and Chambers Ridge projects, which are both selling really well,” he said. “We like the Logan area because it is af-
fordable, has good services, infrastructure and jobs.”
Mr Treasure said it is getting harder to find land for development on the Gold Coast.
“We are always looking for opportunities. We will be looking to build a couple of projects to have in the portfolio so that when Arundel is complete, we will still have a presence on the Gold Coast.”
Villa World is targeting a net profit of about $40 million this financial year, which it said, assumes consumer confidence does not drop off, interest rates remain low, consumer credit conditions do not worsen, and first-home buyer grants remain in place.
It declared a final dividend of 10.5c per share, taking its full-year dividend to 18.5c.
Yesterday, it also announced former Nike vice president Lisa MacCallum, who is based on the Gold Coast, as an independent nonexecutive director.