Villa World CEO and managing director, Craig Treasure, says he considers the Melbourne market to be strong right now, buoyed by population growth.
The state's new first home buyers' incentives are set to provide further fuel for the market and for Villa World, which has owner occupiers in the affordable and mid-price range as core customers.
In Victoria, the Gold Coast company grew revenue by 26 per cent in the half year to 31 December 2016, compared with 20 per cent for the same period the previous year.
"This acquisition will deliver a timely replenishment of land-only stock in one of Victoria's best performing growth corridors, as we move towards completion of our strong selling Cardinia Views project at Pakenham," says Treasure.
"We have been looking to grow our five to six-year pipeline of projects in Victoria, specifically in the south east corridor because of the proximity to transport, excellent education facilities and attractive retail precincts."
The Clyde land has existing residential zoning and is expected to yield more than 400 lots in addition to substantial green space. The site is 55 kilometres from Melbourne CBD, and it is close to transport, education facilities and retail precincts.
"We will continue to actively pursue opportunities such as this, as we execute our strategic acquisition objectives targeting a portfolio of 20% NSW, 40% Queensland and 40% Victoria."
Villa World will pay for the land out of its expected FY17 cash flow of $60-$80 million, plus the $40 million it has set aside for 'capital lite' transactions.
The purchase is expected to settle in the first half of this year and the project is expected to contribute to the company's profit from FY19.
Villa World is working on five further developments in the state, including Cardinia Views at Pakenham and Essence in South Morang.
Robust sales and increased revenue contributed to Villa World last recently upgrading its full year guidance to a profit after tax of $37.5 million, representing 11% expected growth on its FY16 result.
Villa World shares will trade ex-dividend of 8 cps on 8 March. Directors anticipate a final year dividend of 10.5 cps, bringing total dividends of 18.5 cps for the full year a strong 7.4% yield.
Villa World is trading down 1.19 per cent at $2.490 per share at 11am AEDT this morning on the ASX.
Business News Australia
Get our daily business news
Sign up to our free email news updates.
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support