Mega build-to-rent project headed for South Yarra
Melbourne’s affluent suburb of South Yarra will set the scene for Australia’s biggest and most ambitious build-to-rent-project yet with the local arm of US property giant Greystar planning to build a $400 million mixed-use precinct on a “super site”.
Greystar, whose parent company is the biggest operator of apartments in the US, recently bought two adjoining sites in the ritzy inner-city suburb in separate off-market deals with plans to develop a precinct with 5000 square metres of office space, 1000 square metres for retail and more than 500 build-to-rent apartments.
The development, as well as others in the pipeline, will be backed by Dutch pension giant APG, after Street Talk revealed on Tuesday it had tipped $370 million into Greystar’s new specialist multi-family fund for Australia.
Support from such a heavy-lifting European investor is one of the strongest endorsements yet for build-to-rent development in Australia and signals a turning point in the fledgling sector.
“I think this is further validation of an asset class that is highly sought after and broadly accepted on a global basis as being one of the most attractive real estate sectors in which to invest,” said Chris Key, managing director of Greystar Asia Pacific and Australia.
The site is one of the last development opportunities in the otherwise built-up apartment precinct of Forrest Hill and the project is expected to have an end value of more than $400 million.
The pet-friendly apartments will be a mid-market offering targeting young professionals with premium services, events and amenities, such as pools and a business centre, and eight times the number of staff you would expect from a traditional apartment complex of that size.
While Greystar is hoping to launch a number of other build-to-rent projects this year in Sydney and Melbourne, Mr Key said embedded market and legislative barriers in NSW were impediments in Sydney.
A handful of other pioneering developers, backed by offshore capital, are also making progress in the sector.
Grocon, in partnership with Singaporean sovereign investor GIC, has secured a number of build-to-rent projects in Melbourne, while US private equity firm Blackstone also has two projects in the works.
Greystar, which has $36 billion in assets under management, will now go through the planning process with the local council and, subject to approval, would expect apartments to be completed in 2023.
The two properties were bought in December separately from a private Chinese investor and property developer and Financial Review Rich Lister Larry Kestelman.
