Listed Residential developer Villa World has teamed up with private North Queensland developer Honeycombes Property Group to acquire a Hervey Bay subdivision site for a price understood to be $24 million.

The 80 hectare parcel in the Queensland coastal region is expected to yield 830 lots. The site purchase is due to be settled by Christmas. Villa World chief executive Brent Hailey would not comment on the price but said it was proposed work would start on the estate early next year.

Lots in the first stage were planned to be marketed in the middle of next year and priced about $140,000 a block, he said yesterday.

The site is about four kilometres from the coastline and the deal is Villa World's first foray into Hervey Bay. The joint venture vehicle undertaking the subdivision is 75 per cent held by Villa World and 25 per cent by Honeycombes Property Group.

Mr Hailey said the project would contribute to Villa World's 2007 results.

Earlier this month, Villa World forecast a 25 to 30 per cent fall in its full year profit for 2006, after achieving a $25.4 million profit in 2005.

Recently, the group sold a half share in its Dolphin Arcade complex on the Gold Coast to the Raptis Group for $30 million.

Honeycombes is one of Queensland's most active private development groups and has a stronghold in its home base of Townsville.

The company's workbook includes a $200 million plus residential development on the railyard site in Townsville's CBD.

In June, a consortium comprising Honeycombes, Eureka Funds Management and the Chapman Group won preferred developer status to build on two residential parcels in the Riverway precinct in Thuringowa, which adjoins Townsville.

This $110 million project will comprise 260 units on the riverfront.

Villa World's share price closed unchanged yesterday at $1.37

Australian Financial Review
Kathy MacDermott