This article is from the Australian Property Journal archive
2018 is off to a roaring start with a 61-storey high rise apartment project, Southbank’s first build to rent development, changing hands in an off market deal.
Lemon Baxter’s Richard Hutton and Chris Curtain have negotiated the sale of 256-266 City Rd Southbank in an off market transaction, on behalf of Altus Property.
The buyer is believed to Daniel Grollo’s Grocon.
The agents declined to comment on the sale price.
However industry sources told Australian Property Journal that it was approximately $35 million.
Set on a 1,262 sqm site, the site was sold with a permit for a 61-level tower for 410 apartments.
The site was previously intended to be a mixed-use residential and serviced apartment development, however it has been reconfigured it to be 100% build to rent – the first of its type in Southbank.
Hutton said interest in the build to rent or multifamily housing sector is growing, particularly geared towards working professionals and executives who want to live closer to the city.
Hutton added that the property was highly sought after, adding that the permit for a landmark 61-storey tower with residential and hotel uses could not be replicated under current controls.
“The result was excellent, all parties involved happy to transact off market.
“We are proud to be involved with Southbank’s first build to rent development transaction,” he added.
Whilst uncertainty remains in Australia’s build to rent sector due to the federal government’s managed investment trusts (MITs) changes, which discourages foreign institutional investors from the sector, local players are embracing the sector.
Salta Properties is developing Melbourne’s first major build to rent project in the form of a 260-unit, $330 million Docklands tower, as part of a mixed-use hotel development.
Australia’s first multifamily project will be the 1,250 Gold Coast development built for next year’s Commonwealth games by a $500 million fund managed by UBS Grocon Real Estate.
However foreign institutional investors continue to look outside Australia because of the lack of incentives, and in some cases they are teaming up with Australian groups to develop multifamily housing overseas.
Earlier this month Lendlease teamed up with Canada Pension Plan Investment Board to invest £1.5 billion pounds (approx A$2.6 billion) in the UK’s build to rent market, to capitalise on the shortfall of private rental homes.
JLL estimates that if Australia were to reach a relatively moderate level where build to rent represented 10% of all institutional investment in real estate, this would translate to around $40 billion – this figure is still less than 1% of all Australia’s residential housing stock institutionalised.
JLL Asia Pacific director of research strategy Dr David Rees said while it is too early to predict the growth profile of the build to rent sector in Australia, it does have the potential to be very large and to grow relatively fast, as has been case in many other market globally.
For example, the US multifamily sector accounts for around a quarter of all institutional investment in real estate, 4% in the UK and between 10% and 15% in France and Germany.
Australian Property Journal
