Residential developer Villa World is selling a half share in its Dolphin Arcade complex to the Raptis Group for $30 million.

The heads of agreement involves Villa World and the Raptis Group teaming up to jointly develop the Surfers Paradise holding.

Villa World came close to offloading the property outright twice this year to parties with offshore interests for about $58 million - which would have given it a pre-tax profit of $20 million to $22 million - but on both occasions the deals fell through.

The joint venture with Raptis on Dolphin Arcade will provide a significant boost to Villa World's longer term outlook for the current year by an estimated $4.8 million.

Villa World reported a 3.8 per cent lift in its 2004-05 net profit to $25.42 million and paid a final dividend of 8 cents per share.

In August, the company forecast a similar profit for 2005-06, but this result was inclusive of a full sale of Dolphin Arcade.

Villa World has also warned that margins will be under pressure this fiscal year and fall below levels achieved in 2004 and 2005.

The sale of the half stake in Dolphin Arcade was negotiated by Villa World non-executive director directly with Raptis.
He said the joint venture provided significant long term benefits and would capitalise upon the potential of Dolphin Arcade as Surfers Paradise's unit market strengthened.

"We love the site and it's a great piece of the heart of Surfers Paradise," Mr Potter said.

The deal involves Raptis paying an initial $1 million and another $1 million on June 30 next year. Settlement is due June 2007. Mr Potter said the redevelopment would start in early 2008.

The four level Dolphin Arcade was acquired by Villa World in August 2002 for $33 million and last year the group received development approval for a $290 million mixed use project. This scheme included two unit towers comprising a total of 398 units and 3500 square metres of retail outlets.

Raptis chairman Jim Raptis has been lifting his exposure to the Gold Coast and is particularly bullish about the rejuvenation of Surfers Paradise.

At the start of this year, the Raptis Group settled its $106 million purchase of the then ANA hotel.

Mr Raptis said yesterday that he was confident demand was steady for specific unit products within Surfers Paradise.

"I just feel this Dolphin Arcade site when developed will add more value to the centre of Surfers Paradise," he said.

The Raptis Group's $450 million Chevron Renaissance development followed by Sunland's Q1 unit tower had fuelled the urban renewal of Surfers Paradise and was drawing people back to the traditional centre of the Gold Coast, he said.

"The growth of central Surfers Paradise is the strongest I've seen since the mid to late 1980s."

Further north on the Gold Coast, Raptis is undertaking a $700 million mixed-use development at Southport.