This article is from the Australian Property Journal archive
BUILD-to-rent is gaining further momentum in Australia, with a car park on Melbourne’s CBD fringe slated for a luxury apartment development now set to be transformed into a build-to-rent project.
The acquisition by Novus of 2 Bowen Crescent, in the St Kilda Road precinct, will push its Australian build-to-rent portfolio beyond $1 billion.
Located just 200 metres from the under-construction Melbourne Metro Anzac station, the car park site was to be developed by Chinese group Wuzhong International into a building with 214 high-end apartments. The approved plans will now go through a modification process to be re-designed for a build-to-rent asset with 212 apartments plus the inclusion of wellness-based communal amenities.
The project is targeting a 7- star NatHERS rating, will be an all-electric building, powered by renewable generated green power. Environmental features will include solar PV panels, energy-efficient appliances, rainwater capture and on-site-reuse and integrated smart monitoring systems.
Construction is due to start in early 2024.
In recent days alone, Singapore-listed giant CDL has made an entrance into the fast-growing sector down under, while Dutch pension fund APG Asset Management and Bouwinvest have backed a new $1.5 billion Scape Australia Fund, while US giant Brookfield has also just announced its first project in the country.
Novus has build-to-rent projects underway in Melbourne’s Southbank and in Sydney’s Parramatta and Chatswood, and has further projects in due diligence across Sydney, Melbourne and Brisbane. The Bowen Crescent project has been acquired on the balance sheet and will be used as a seed asset for Novus’ second build-to-rent investment vehicle following its initial fund with M&G Real Estate, the Novus Build-to-Rent Trust.
“The tailwinds driving the growth of the Build-to-Rent sector in Australia continue to grow with increasing government support for the sector and record low vacancy rates,” said Adam Hirst, co-founder and chief executive of Novus.
The Albanese government has just announced it would halve the withholding tax rate for foreign investors in managed investment trusts from 30% to 15%, a move long-awaited by the sector.
Build-to-rent is viewed by some to be a potential alleviator of the nationwide rental crisis. Housing vacancy rates across Australia’s capital cities are at a record low amid a chronic undersupply of properties, and the market is set to come under further demand pressures with accelerated rental increases as record migration levels continue into the next financial year.
“Australia’s build-to-rent sector is poised to mature over the medium term due to lifestyle changes, rising home prices and demand for high-quality, purpose-built homes with service-focused property managers. The country’s strong population growth over the past 15 years is set to continue which, in addition to a structural undersupply of apartments, strong rental demand and affordability constraints presents a compelling opportunity for long-term investors,” Hirst said.
Jason Goldsworthy, co-founder and chief development officer of Novus said the existing location already benefits from proximity to Melbourne CBD, adjacency to both the Botanical Gardens and Albert Park and surrounding amenity, to be further enhanced through the completion of Anzac station, “making this one of the most connected locations in Melbourne”.
“These fundamentals align perfectly with our mid-scale convenience-based build-to-rent model.
Melbourne dominates Australia’s build-to-rent pipeline, accounting for around 63% of supply, according to JLL. Close to the Bowen Crescent property, Daniel Grollo’s Home platform, backed by Singapore’s sovereign wealth fund GIC, has just bought the Bayview Eden Hotel for about $80 million, where it plans to construct 560 build-to-rent apartments, while Altis Property Partners and Aware Super acquired the abandoned Bayview on Park site for $72.7 million, also for a build-to-rent development.
