Lendlease signs Japanese partner for $500m build-to-rent tower

Under the radical restructure forced upon it by activist investors earlier this year, Lendlease is now in a race to establish itself as a dominant local developer and investor, and it is tapping the expansion needs of Japanese property investors – whose own domestic market is shrinking – to fund that growth.

“The launch of our first-ever partnership with NSKRE to deliver a new build to-rent development on Melbourne’s waterfront represents a strategic opportunity to leverage our shared global expertise in this sector as we deliver Lendlease’s third build-to-rent project in Australia,” Lendlease development head Tom Mackellar said.

“This announcement also highlights the continuing demand from our Japanese partners for high-quality opportunities across our development pipeline, and we look forward to working together to deliver on NSKRE’s first project in the Australian market.”

Lendlease is largely withdrawing from markets such as the UK – where it developed the Bluewater shopping centre in Kent, acquired builder Bovis and to where it briefly relocated its head office – and the US, where it built a string of projects for Donald Trump, including the Trump International Hotel in Washington. It plans to keep investing overseas.

Last month, Lendlease chief executive Tony Lombardo told The Australian Financial Review Property Summit that the company aimed to have 75 per cent of its capital invested in Australia – a turnaround from the 30 per cent figure when he took over the top job in 2021.

Tackling Australia’s chronic housing undersupply is a key opportunity, and Lendlease is pairing with a range of investment partners – many of them Japanese companies – to develop different types of housing.

In July, Lendlease partnered with Mitsubishi Estate Asia to acquire a 1746-square-metre site in Edgecliff in Sydney’s east and boost its pipeline of for-sale apartments.

“NSKRE has always prioritised collaborating with reliable local partners when expanding our operations overseas,” said Itaru Ishihara, the Japanese property company’s managing director of international business.

“As we make our inaugural entry into the Australian market, we are delighted to partner with Lendlease, a company renowned for its outstanding achievements and significant presence in Australia.”

While the Docklands build-to-rent deal is Lendlease’s second in Melbourne – after nearby Melbourne Quarter, on which it partnered last year with another Japanese developer, Daiwa House – and third in a production line that started with Brisbane’s 443-unit Exchange Quarter project, the new partnership strengthens its 2700-strong BTR pipeline.

Lendlease will sell down more of the Docklands and in time look to bring in other investment partners beyond Nippon Steel Kowa Real Estate, it said.

Early works have already begun and construction will commence this year on the 24-level project that will have a mix of studio, one-, two- and three-bedroom apartments. The company did not say if it would include an affordable housing component.

It will have external communal spaces with an outdoor pool overlooking Victoria Harbour, a dog park and an outdoor rooftop barbecue area. Other amenities will include music and podcast rooms, lounges, gym and cinema, wellness treatment rooms and private dining rooms.