RESIDENTIAL property group Grainger has predicted its profits for 2007 will exceed last year's after increased volumes and margins on sales.

The Newcastle company said total sales volumes were expected to be about £128m for the year to September 30 - far in excess of predictions.

Further growth in the coming year could be on the cards, with Grainger securing outline planning permission for a mixed-use development on a 132-hectare site near Waterlooville, Hampshire.

Grainger has made acquisitions worth a total of £151m during the past year, with £110m-worth of tenanted residential properties being purchased in the second half.

It includes a £62.5m, 300-unit portfolio in The Tilt Estate Company, based in London. The firm has also been active on the acquisition trail in Germany.

In a trading update to the Stock Exchange yesterday, Grainger said that while there was a general acceptance that the overall rate of growth in the UK housing market would slow in the coming months, it estimated the increase in the vacant possession value of its UK properties will be between 9.5 per cent and 10.5 per cent.

Earlier this year, Grainger ended fundraising for its investment fund G:Res1 after total third party contributions reached almost £160m, with its parent company's stake standing at £44m, or 21.6 per cent of the fund.