Importance of Strategy with Asset Selection


CFMG Capital's development pipeline of more than 1,000 lots across six different projects has provided a stable platform for growth with the key to this success being working to a clearly defined strategy with asset selection.

CMFG Capital adopt a three tiered selection criteria which has enabled us to capitalise on the ongoing demand for residential land across various markets.

The importance with asset selection and with identifying appropriate land for development was highlighted in a recent article by Domain which noted that the property industry fears a shortage of land on the Gold Coast could stall one of the fastest growing economies and property markets in the State.

It was noted that while there are large tracts of unimproved land on the Gold Coast, most of it isn’t really suitable for residential land development. It’s not as simple as vacant land being available and is therefore ready to be developed, there are a number of other factors that make vacant land suitable for residential development. To review a full copy of the article click here.

The key characteristics which CFMG Capital take into account when identifying suitable projects include:

  • Proximity to a capital city;
  • Population growth and demographics of the locality;
  • Transportation options;
  • Employment opportunities;
  • Lifestyle choices including schools, family security, transportation and recreation; and
  • Topography of the land and ability to deliver key service infrastructure.

Another key focus for CFMG Capital is to assess the geographic locations and States within Australia which have the appropriate fundamentals for growth.

CFMG Capital are currently operating six separate projects – five in Queensland and one in Victoria and delivering its active investor base a fixed 12 per cent annual return via its CFMG Land & Opportunity Fund.

The CFMG Land and Opportunity Fund’s 12 per cent return (net of fees) is considered attractive compared to other asset classes. Residential investment property returned 8.1 per cent annually over the 10 years to December 2016, the 2017 ASX/Russell Investments Long-Term Investing Report shows.

Australian shares returned 4.3 per cent annually over this period, Australian listed property had a zero return and cash returned 2.8 per cent.

This performance requires CFMG Capital to be across all markets and economic fundamentals which have the potential to impact on future cycles.

Notwithstanding that capital cities have outperformed the regional market on average, Sydney’s widely reported unaffordability issues are starting to strengthen the case for ongoing growth in surrounding regional areas like Newcastle, Southern Highlands and Illawarra.

This was highlighted in a recent article in the Newcastle Herald which confirmed that the Newcastle CBD building boom is creating jobs and homes. To view the full article click here.

To learn more about CFMG Capital's processes and how CFMG Capital may be able to assist you, book into an online information session or have an investment consultant call you back at a time that suits you.