This article is from the Australian Property Journal archive
PROPERTY group Lendlease and Japan’s biggest homebuilder, Daiwa House, will develop a $650 million built-to-rent tower on the edge of the Melbourne CBD that with 797 residences will be among the country’s biggest in the fledgling sector to date.
The development, located at 646-666 Flinders Street and bordered by Collins and Flinders streets, and in close proximity to Southern Cross station, will rise 45 levels and be the final component of Lendlease’s multi-billion mixed-use Melbourne Quarter precinct.
It will be Lendlease’s second build-to-rent project in its home country, following on from its 443-unit project at Brisbane Showgrounds, while it has just announced it will be developer and construction partner alongside the City of Melbourne for a $1.7 billion precinct next to Queen Victoria Market that will include build-to-rent housing. The company has an established presence in the US and UK build-to-rent markets.
Daiwa House is Japan’s largest home builder and one of Japan’s largest property developers, with over six decades of experience in single-family housing, rental housing, commercial facilities, logistics and condominiums. The project marks Daiwa House’s entry into Australia’s build-to-rent market, while the partnership is the second between the companies following on from Claremont Hall residences in Manhattan.
“This announcement highlights continuing demand from our Japanese partners for high-quality opportunities across our global project pipeline – in total, we’ve now secured Japanese investment in projects totalling approximately $11 billion in end development value. It also represents a major vote of confidence in Australia’s property market,” said Lendlease Australia CEO Dale Connor.
At Melbourne Quarter, Lendlease has partnered with Japanese developer Mitsubishi Estate Asia on the residential East Tower, and last year they again teamed up for an $800 million-plus deal to acquire the $3 billion One Circular Quay development in Sydney. That’s next to Lendlease’s $1.9 billion Salesforce Tower that Mitsubishi Estate Asia is also a partner in.
At the Melbourne Quarter build-to-rent project there will be a mix of studio, one, two and three-bedroom apartments, and residents will have access to amenities and communal spaces including a 25-metre lap pool, bowling alley, karaoke and music studio, co-working space, virtual sports and games rooms, cinema, fully equipped gym with spa, sauna and steam rooms, with a dedicated on-site concierge.
The building will be all-electric and target a 5-Star Green Star Design & As Built v1.3 rating.
Construction is due to begin in August, with residents to take occupancy from early 2026.
“Housing accessibility is front of mind for Daiwa House and this build-to-rent opportunity is reflective of our commitment to assist with increasing the supply of quality and well-positioned rental accommodation for the residents of Melbourne,” said Koji Morishige, CEO of Daiwa House Australia.
On completion, Melbourne Quarter will have more than 3,800 residents and 14,000 workers.
More build-to-rent for Melbourne
Build-to-rent has been gaining momentum in Australia, with a flurry of recent activity following the federal government offering tax breaks on developments.
Build-to-rent is viewed by some to be a potential alleviator of the nationwide rental, and investors wanting to position for a recovery in residential volumes and earnings are best to put their money in apartments and build-to-rent rather than house-and-land, according to UBS.
Melbourne dominates Australia’s build-to-rent pipeline, accounting for around 63% of supply, according to JLL, with nearly all of those projects in city fringe and inner suburban locations.
Mirvac late last year opened its build-to-rent offering next to Queen Victoria Market, and has projects Brunswick and on the edge of the CBD at 7 Spencer Street. Greystar has a $500 million development in South Yarra that will be the largest of its type in Australia, and another $500 million project in South Melbourne, while prolific developer Tim Gurner’s pipeline includes 550 apartments within a $1.75 billion project in Docklands that he bought into alongside the wealthy Liberman family last year
