Tetris Capital, Icon to take on project for 1400 Victoria homes
Tetris Capital and builder Icon Kajima are in the box seat to take on Victoria’s second so-called ground lease public housing renewal project, having secured preferred tenderer status to develop about 1400 new homes across four Melbourne existing housing sites.
The Tetris-led consortium, which also includes community housing provider CHL, has financial backing from groups including the federal government’s National Housing Finance and Investment Corporation, ANZ and Sumitomo Mitsui Banking Corporation.
The contract, which is expected to close in the next few weeks, is for the construction, costing up to $850 million, of new social, affordable and commercial build-to-rent housing in South Yarra, Prahran, Hampton East and Port Melbourne.
The public-private partnership is the second of its type the state government has pursued as part of its $5.3 billion Big Build program.
The first such contract was awarded in 2021 for the construction and management of 1110 new homes over three sites on a 40-year contract under which the state retains ownership of the underlying land. Its success made it an attractive option for the state to pursue again, sources said.
Tetris, Icon and CHL – key parties in the consortium that were awarded the first ground lease project – declined to comment. Citta Group, the development partner in the first project, is not part of the current bid.
“We’re delivering Australia’s biggest ever urban renewal project that will boost social housing by at least 10 per cent across 44 sites,” a government spokeswoman said on Sunday.
In 2021, NHFIC issued its first sustainability bond, worth $343 million, to fund the first ground lease housing project.
Demolition has commenced and preliminary work is likely to continue into the first half of next year. Sources say the completion was expected by late 2026.
The largest component of new housing will be built at the Horace Petty low-rise public housing site in South Yarra, where the existing 204 walk-up homes will be replaced by a range of one-, two-, three- and four-bedroom homes and include specialist disability accommodation.
The contract, under negotiation for more than a year, is separate from the longer-term project that former premier Daniel Andrews announced three weeks ago to knock down and rebuild 44 public housing towers over the next three decades.
Although the ground lease model marks a break from the past by retaining state government ownership of the land, a range of procurement models would be needed to roll out the stiff target the state has set for 800,000 new homes over the next 10 years, an industry source said.
“It’s going to be a mix of everything,” the source said. “There is so much to be built that if they just went with PPPs, they’d never build it.”
The state’s push to develop more social and affordable housing stock could benefit from the downturn in the commercial development market, as developers sought to offload to the state government sites they had bought for apartment projects but could no longer develop viably.
“There will be a mix of PPPs, straight tenders and will be lots of social and affordable housing where private companies and development companies got a site, it doesn’t work for [commercial] residential but it works for social and affordable housing,” the source said.
“They’ll say ‘Can you buy it off me and I’ll manage the development and construction faster than you can’.”
The other public housing sites included in the so-called GLM-2 contract are at Bluff Road in Hampton East, Essex Street in Prahran and Barak Beacon in Port Melbourne.
