It’s no secret that property prices, along with household debt, have raced higher in the last few years. This has occurred at a rate much faster than wage growth and has raised concerns that we might be in a housing bubble.
With the big banks such as Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd. (ASX: NAB) tightening their lending and others such as Bank of Queensland Limited (ASX: BOQ) hiking rates, this has led to concerns that this bubble might be about to pop.
There has also been a particular focus on the Brisbane apartment market with reports in the Australian Financial Review that some buyers of off the plan units from Lendlease Group (ASX: LLC) are now selling at a loss.
Despite this, Sunland Group Limited (ASX: SDG) is taking on the Brisbane market.
The Queensland based property development company announced that it has acquired a 3.26-hectare site in Kenmore, 11km south-west of the Brisbane CBD, for $13.1 million.
According to the announcement, the site has, “Development Approval for 96 four bedroom terraced homes with an estimated end value of $65 million”.
With a portfolio of other Brisbane properties including the Shea Residences in St Lucia which is sold out, how is Sunland aiming to beat the bubble?
Beating the bubble
The Sunland Group Managing Director said the group’s strategy is to focus on:
- Premium sites in high growth areas
- The owner-occupier market (as opposed to investors)
- Areas with considerable natural and built amenities including good schools, parks and shopping centres
In other words, an area where you’d be willing to live and raise a family.
While the property market would not be my first investment choice (I think there are better opportunities elsewhere), I think it makes sense for companies within that industry to focus on the key growth drivers going forward.
As new households form, they will want to live in good areas and Sunland is looking to benefit from that.
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The Motley Fool Australia owns shares of National Australia Bank Limited. 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 Scott Phillips.