2 small cap property shares to buy

Credit: Mark, Vicki, Ellaura and Mason

Besides buying property directly you can to get exposure to the property market, via real estate shares on the ASX.

The ASX has plenty of property shares to choose from, that develop or manage, residential, commercial or industrial property.

DEXUS Property Group (ASX: DXS) is one that covers all three, while the Investa Office Fund  (ASX: IOF), manages office properties around Australia.

Below are two small cap shares, focused on the Gold Coast and Perth, that I think have the potential for solid growth.

Finbar Group Limited (ASX: FRI) is a residential property developer, mainly developing apartments and some commercial property in Perth.

The company has $68 million in cash and while there is some debt, it is all related to projects. Finbar reported $5.1 million in net profit for Fy2017, which is the 21st year of consecutive profit.

Sales are starting to ramp up and this year they have sold 154 units, being either pre-sales of future projects or sales of completed projects, which is up from last year.

The company paid a fully franked 6 cent dividend for the year, which is the 15th consecutive year paying dividends and has a dividend yield of 6.22%.

The share price is down from a high of $1.8 0in 2013, due to a decline in pre-sales, but looks to have bottomed out, so could be good for price appreciation, growth, and yield.

Sunland Group Limited (ASX: SDG) is also a property developer of residential housing and urban development.

The share price has risen 338% since the depths of the GFC and has a dividend yield of 4.65%. The P/E ratio is 7.68.

The company has most of its developments around the Gold Coast, which is benefiting from foreign investment, mainly from China and the Commonwealth games being held in 2018. This has also lead to improvements in infrastructure, notably the airport.

But not all are foreign investors, with many southern buyers coming up from the colder climates.

Property Analysts are predicting the market to be hot for another 2-5 years and it still has not reached the heights of the big centres of Melbourne and Sydney.

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Motley Fool contributor Christopher Coe owns shares in Finbar Group Ltd and Sunland Group Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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