Ingenia modular home park owner moving into greenfields projects

Modular home park owner Ingenia will advance into greenfield development as competition for assets reaches new heights.

Simon Owen, the CEO of Ingenia, has said that “there is increasing competition for quality parks and we see a move into greenfields is one way we can grow the business”.

Modular home park owner Ingenia will advance into greenfield development as competition for assets in the emerging sector reaches new heights and drives capitalisation rates lower for the first time in five years.

“There is increasing competition for quality parks and we see a move into greenfields is one way we can grow the business,” Ingenia chief executive Simon Owen said.

“Today for DA-approved sites with services in place, you’re looking at $50,000 to $60,000 a site, whereas greenfields and optioning the land works out closer to $10,000 a site.”

Ingenia has amassed a portfolio of 20 modular home parks valued at $204.2 million in the face of growing competition from Gateway Lifestyle Villages.

It also has a portfolio of 31 rental villages.

But the arrival of US investor Blackstone in the sector, and the emergence of interest from sovereign wealth funds including Singapore’s GIC — which has run the ruler over a number of portfolios in past months for a potential joint venture — is adding a new element of competition.

“A-grade parks in quality locations with strong demand are now trading on yields of around 8 to 8.5 per cent, compared to six months ago, when they were trading at between 9 and 9.5 per cent,” Colliers International valuer Stuart Strong said.

“We’ve seen groups looking for transformation opportunities, as in caravan parks that they convert into permanent sites, and then we saw a wave moving into Victoria and Western Australia, and the next step is moving into greenfields development.”

For Ingenia, the move marks the first step in a strategy that will start adding to earnings in three years time. But it also represents a lift in the level of planning and development risk the group will have to shoulder.

“Some councils have a wariness about low-cost trailer parks bringing in undesirable elements, but the majority of councils are very supportive,” Mr Owen said of securing planning approval. “They know it can deliver an affordable housing solution for communities. It’s just a matter of figuring out what their priorities are.”