Affordable housing provider Eureka Group (ASX: EGH) is expanding into the all-age rental market with the $4.5 million acquisition of Kin Kora residential home village and caravan park in regional Queensland.

Eureka plans to refurbish the mixed-use park, located in the high-employment market of Gladstone, in an effort to meet the state’s growing demand for low-cost living.

The company will fund the purchase from the proceeds of a $70.4m equity raising in November and expects to settle next month.

Village lots

Kin Kora comprises 109 lots including 19 manufactured housing estate homes, 13 short-stay cabins and 77 powered and unpowered sites for camping and caravans.

It also has a three-bedroom manager’s residence, a central amenities block and an in-ground swimming pool.

Eureka has submitted a development application to convert 28 of the caravan sites into new one- and two-bedroom rental villas, with an anticipated yield of 9.2%.

All-age rental market

Chief executive officer Simon Owen hoped the refurbishment would help Eureka break into the all-age rental market.

“Australia’s housing crisis continues to impact all communities, including those in regional areas such as Gladstone,” he said.

“Kin Kora presents an excellent opportunity for us to meet growing demand for affordable, low-cost housing to service a range of markets including essential service workers, active retirees and tradespeople.”

First of many

Eureka expects this to be the first of many similar projects for the company.

“We have multiple parks under due diligence and a long pipeline of opportunities under review, and we expect to quickly grow this sector in parallel with the expansion of our existing seniors’ affordable rental portfolio,” Mr Owen said.

Eureka currently operates Eureka Care Communities seniors’ rental living village in Gladstone, which continues to trade at high occupancy.

It also owns a parcel of land adjacent to the village that has been earmarked for the future development of additional seniors’ rental accommodation.

Home ownership rate

Research shows the rate of home ownership in Australia is continuing to decline and is coupled with a shortage of affordable rental homes.

Based on data from the 2021 national census, approximately 30% of Australians rent their homes, with 85% of renters being under the age of 55.

Gladstone is the 11th-largest town in Queensland, with a population of 34,703 and a region comprising 65,500 residents.