This article is from the Australian Property Journal archive
MACQUARIE will fund a $500 million pipeline of build-to-rent developments after striking a partnership with property executives Matt Berg and Dan McLennan, to operate under the banner of Local, in another major step for the fledgling sector.
All Local projects will incorporate a targeted component of impact housing with accommodation, focusing on three groups – key workers such as nurses and hospitality workers, people living with a disability and women over the age of 55 who are at risk of homelessness.
The platform is also targeting zero carbon emissions within its buildings, reduce embodied carbon and target a 7.5 Star NatHERS rating, exceeding minimum standards and market practice.
A real estate joint venture managed by Macquarie Asset Management’s Real Estate division and comprising Macquarie and major global real estate investors intends to fund Local. Its first project will be in Kensington in Melbourne’s inner north west, and will comprise 500 apartments and is due for delivery by the end of 2024. Kensington to is already home to multiple build-to-rent and alternative housing developments.
Matt Berg, Local co-CEO and founder said traditionally within developments, impact housing is segregated, without access to building amenities, which something Local is looking to improve upon.
“We saw a real gap in the Australian market for a platform which not only delivered quality housing and commercial returns, but also actively embraced the opportunity to deliver genuine impact and inclusion.
“Through taking a holistic and long-term view, we can invest in a range of meaningful sustainability initiatives such as onsite renewable power, low-carbon materials selection and additional insulation.
“For a conventional developer, these may not deliver increased sales prices and therefore get put aside. However, for us, a strong focus on environmentally sustainable design will deliver a better longer-term income stream, future proof our assets and offer a genuine alignment with the values of our investors, customers, and staff.”
Local will actively seek to grow its pipeline in order to scale and cater to demand over the coming years, with a focus on Melbourne and Sydney. Melbourne has emerged as the most active location in the build-to-rent space nationally, accounting for over 60% of the projects either proposed or under construction. The Victorian government recently extended its build-to-rent tax concessions as the sector gains traction among major developers and rising housing affordability concerns.
Macquarie’s commitment and the announcement of the new Kensington project come hot on the heels of Samma Property Group and Brightlight announcing they are plotting a $1.7 billion pipeline of projects, starting with sites in Southbank and Docklands, and US giant Greystar unveiling plans for Australia’s largest development in the sector in the inner suburb of South Yarra.
Also yesterday, Pellicano announced it has submitted plans for 410 new apartments across three projects, one of those in Melbourne’s Oakleigh South.
Elsewhere, major developer Mirvac has sites developments next to Queen Victoria Market and on Spencer Street, and has partnered with Milieu for a project in Brunswick. Canadian group Oxford planning a $450 million development with over 700 units in the inner western suburb of Footscray, and global real estate firm Hines also buying a Brunswick site for a 250-unit apartment complex.
The country’s biggest superannuation fund, AustralianSuper took a 25% share in build-to-rent and alternative housing developer Assemble.
“We strongly support the build-to-rent sector in various parts of the world and believe it has significant potential to grow in scale in Australia, driven by demographics including a growing renting population,” Macquarie Asset Management’s global CIO real estate, Jelte Bakker said.
“Local’s founders have a deep understanding of the Australian residential market and are taking an innovative approach to developing build-to-rent projects. Globally we are seeing changing demographics and an increased focus on sustainability driving an evolution in tenant demand.”
