CRAIG Treasure isn't buying into talk that the property market has had its run.
"Australia is a tale of many different property markets," says the Villa World CEO after addressing shareholders at the annual general meeting at Broadbeach this morning.
"The apartment market in Sydney and Melbourne is clearly very different from the housing market in the growth corridors of Brisbane.
"If you talk to our potential customers they've probably only seen growth of 3 per cent in their house prices over the last year.
"They don't live in the Sydney property bubble that we read about every day."
Treasure's comments are backed up by one of the strongest profit results in the Gold Coast-based company's history in FY15, with expectations that the current year will be even better.
Villa World posted a net profit of $25.6 million last financial year, built on a pre-tax result of $29.4 million. This financial year it is forecasting a $40.5 million pre-tax result, with much of that driven by demand in its key Queensland markets, including Brisbane and the Gold Coast.
Treasure says he expects steady growth from its markets in both Queensland and Victoria for 'at least the next couple of years'.
"Some of people in our sector have said five years of strong growth in Queensland, but that's a long time to talk about in property, but for the next two years we're quite comfortable."
Villa World is heavily weighted in Queensland at the moment with 80 per cent of group revenue expected to be generated from developments mainly in the state's south-east this financial year.
"We're really happy with that bias, but over time we'll diversify that in other states," says Treasure.
Villa World plans to spend up to $150 million on new site acquisitions this financial year.
The company currently has a pipeline of 5000 lots across 20 projects, with plans to release seven new projects in FY16.
Villa World has ramped up its development interest on the Gold Coast in recent years, with Treasure announcing the company's proposed 350-lot development at Arundel to be among the projects that will drive double-digit growth for the company.
The prized infill site was secured for $30.7 million from the O'Briens who have been tempted by developers for the past 20 years to part with the property. The Villa World project is set to benefit from the planned light rail extension to Helensvale which will be completed in time for the Commonwealth Games in 2018.
"Arundel is a larger project that gives us economies of scale and we're really looking forward to rolling that out next year," says Treasure.
"Overall the Gold Coast is still a small part of our portfolio, but increasingly the Gold Coast-Brisbane corridor is a good market to be in."
Chairman Mark Jewell told shareholders that as Villa World prepares to celebrate 30 years as a listed company in 2016, it has 'come of age' over the past year.
"Our credibility and reliability continues to translate into consistent and solid dividends for shareholders," he says.
Jewell notes that, based on last year's full-year payout of 16c a share, Villa World's yield of 8 per cent is among the highest full-franked payouts in the market.
Jewell sees continued growth ahead for the company, describing the affordable markets in which Villa World operates as 'resilient'.
In the first quarter of FY16 the company recorded 90 sales a month, up from 82 sales a month in the second half of FY15. This puts the company on track to deliver between 1000 and 1200 lots to the market this year.
Meanwhile, Treasure is not concerned about interest rates eventually rising, even though major banks have just lifted rates independently of the Reserve Bank of Australia.
"Interest rates are not the prime driver," he says. "We'll sell more property with a strengthening economy and rising interest rates."
Treasure this morning was given a keen incentive to continue growing the business after shareholders approved the issue of 316,902 performance rights to the CEO.
The shares are worth about $675,000 and will vest with Treasure subject to the company achieving prescribed financial targets. Shareholders overwhelmingly voted in favour of the issue.
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