This article is from the Australian Property Journal archive
LENDLEASE has partnered with another Japanese investor as it further its business restructure, bringing in Nippon Steel Kowa Real Estate (NSKRE) for $500 million build-to-rent apartment project in Melbourne’s Docklands.
Under the terms of the new partnership, NSKRE will take a 40% equity share in the 899 Collins Street venture. Lendlease will seek to bring in additional partners as the project progresses.
The partnership is the pair’s first and marks NSKRE’s entry into the Australian market. It has expertise in developing and leasing office buildings, condominiums for sale and logistics in addition to international high-end rental condominiums.
Lendlease will develop, construct and act as the investment manager for the development, which will offer 499 residences in a mix of studio, one, two and three bedroom apartments spanning 24 levels.
Early works are underway with construction set to commence this year and due for completion in 2026.
The development is located on the waterfront in Lendlease’s Victoria Harbour precinct, and will be its third build-to-rent residences to be delivered in Australia, following on from Exhibition Quarter in Brisbane, and a Melbourne Quarter development, both of which are currently under construction.
Lendlease last year brought in Japan’s largest homebuilder, Daiwa House, to develop its $650 million Melbourne Quarter build-to-rent tower, at 646-666 Flinders Street in the Melbourne CBD.
It will also 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.
Lendlease currently has circa 2,700 build-to-rent apartments in delivery, in addition to an existing 2,800 managed apartments. Together, it brings Lendlease’s build-to-rent portfolio to 5,500 apartments.
“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,” said Tom Mackellar, CEO development, Lendlease.
Residents will enjoy unobstructed water views over Victoria Harbour and south over the Yarra River out to Port Philip Bay, with external communal spaces making use of the waterfront location with an outdoor pool overlooking Victoria Harbour, a dog park and outdoor rooftop barbecue area. Amenities include music and podcast rooms, lounges, a full-sized and gym, cinema, wellness treatment rooms and private dining rooms.
899 Collins Street will be all-electric and target a 5 Star Green Star Building rating.
Charter Keck Cramer’s projections suggest that annual apartment completions in Melbourne over the next three years will average only 8,000 apartments, with an equal split between build-to-rent and build-to-sell units. Melbourne is the only capital city which, over the next three to four years, will be more reliant on build-to-rent apartment supply than build-to-sell to deliver new higher density dwellings.
Inner Melbourne has been the epicentre for Australia’s nascent build-to-rent sector. In Docklands alone, Victoria’s Allan government has approved AsheMorgan’s 925-apartment project plans at 24 Little Docklands Drive, near Marvel Stadium and the Esplanade; Gurner and Liberman family-backed joint venture partner City Harbour this year unveiled plans for a “futuristic wellness and anti-ageing utopia” within their $1.7 billion Elysium Fields project on Harbour Esplanade, next to Marvel Stadium, which will include a build-to-rent component within its 1,350 apartments, and developer Samma Property Group has the green light for a $250 million tower with build-to-rent on the Yarra River, next to the Bolte Bridge.
Japanese investment continues down under
Mackellar said the Lendlease and NKSRE partnership announcement “also highlights the continuing demand from our Japanese partners for high quality opportunities across our development pipeline”.
NKSRE’s investment is the latest major play by a Japanese company into Australia’s real estate sector.
Australia’s biggest home builder Metricon will become majority-owned by Tokyo Stock Exchange-listed Sumitomo Forestry, while last month Australian Property Journal reported Hankyu Hanshin Properties making a play for a 2,000-apartment project at Melrose Park in a joint venture with Sekisui House Australia, marking its first residential development in Australia. It comes hot on the heels of its joining forces with a Malaysian investor to invest $536 million in a portfolio of logistics properties across the country.
Also in the logistics space, ESR’s local arm recently partnered with Mitsubishi Estate Asia to develop a $175 million industrial estate in Melbourne’s south-east, while Tokyo-headquartered CREAL made its first overseas investment by providing finance for a $39.5 million self-storage and warehouse development in Kirrawee.
Japan’s largest diversified property developer, Mitsui Fudosan, in June took a majority stake in Mirvac’s $2 billion 55 Pitt Street office development in Sydney
Japanese investors were the most active source of offshore capital in Australia throughout 2023, putting $2 billion towards assets down under.
Itaru Ishihara, managing director of international business NSKRE, said, “NSKRE has always prioritised collaborating with reliable local partners when expanding our operations overseas.
“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.
“Moreover, this project aims to address the housing needs of Melbourne’s growing population, focusing on the increasingly popular build-to-rent sector.”
