This article is from the Australian Property Journal archive
HOT on the heels of expanding into the industrial sector, US property giant Greystar has boosted its pipeline of build-to-rent (BTR) units across Melbourne beyond 2,000 after acquiring sites in inner-city suburbs Kensington and Fitzroy, as the fledgling sector gathers pace amid a national rental crisis.
Greystar has just added 155 Johnston Street in Fitzroy to its portfolio after earlier this year acquiring 352-400 Macaulay Road in Kensington with a proposal to develop over 400 units with an end value of more than $350 million.
“This was a rare opportunity to secure a site suitable for BTR in the heart of Fitzroy,” said Chris Key, managing director – Australia at Greystar,
“It is a highly sought-after neighbourhood for many reasons and until now has remained untapped by the BTR market. It is undoubtedly a suburb that is full of some of the city’s best retail stores, galleries, bars, pubs, restaurants, and cafés – and we look forward to being able to extend the lifestyle options in the area with an exciting rental proposition for future residents.”
It said it would look to progress the Fitzroy project, on 2,556 sqm of land, through town planning with Yarra City Council in the coming months.
In contrast, Kensington has multiple BTR projects underway or in planning.
Greystar’s Kensington development is situated within the City of Melbourne’s Macaulay Urban Renewal Area that will see the predominantly industrial area transformed into a mixed-use neighbourhood. It will offer two train stations within a short walk and is close to Arden station, which forms part of the under-construction Melbourne Metro project.
“Working closely with our neighbours in the precinct, we are striving to optimise the interface between our properties to create excellence in placemaking and deliver over 400 residential apartments that are thoughtfully interwoven into the local area,” Key said.
Earlier this month Greystar announced it was also expanding into Australia’s industrial and logistics sector.
Early last year Greystar raised $1.3 billion to invest in Australia’s BTR market, with backing from Ivanhoé Cambridge, a major European institutional investor and APG Asset Management. Just over 12 months ago, it announced a $500 million project in South Yarra that will be the largest of its type in Australia, and it is also developing another $500 million project at 15-85 Gladstone Street in South Melbourne that will have 700 units.
The national vacancy rate is sitting at its lowest level since 2006, at 0.9%, according to SQM Research, and the National Housing Finance Investment Corporation forecasting a shortfall of 163,400 homes by 2032. Property players say build-to-rent can fill the void left by build-to-sell.
Australia’s build-to-rent sector is expected to mature into a $9.6 billion market by 2027, and while federal government tax arrangements still present challenges, the Victoria and NSW governments have introduced concessions. Most existing developments either under construction or in planning are in Melbourne.
As well as Greystar, major institutional players and developers active in the market include Mirvac, Investa and Oxford’s Indi, as well as Gurner, Altis and Hines, while US real estate investment and development firm Sentinel and Dutch pension fund manager PGGM have entered into a $1.5 billion partnership to develop and manage communities across Australia.
