This article is from the Australian Property Journal archive
MIRVAC, one of the major early adopters of build-to-rent in the fledgling Australian market, is establishing a $1.8 billion venture backed by the Clean Energy Finance Corporation (CEFC) that will see developments aim high for green credentials, as momentum gains in the sector.
Mirvac will retain a 44% interest in the venture alongside “well-capitalised cornerstone investors” that include the CEFC.
The venture will comprise Mirvac’s operational build-to-rent assets – LIV Indigo in Sydney Olympic Park, and the recently completed LIV Munro, next to Melbourne’s Queen Victoria Market – as well as its pipeline assets LIV Anura, in Brisbane, and LIV Aston on the edge of the Melbourne CBD and LIV Albert Fields in inner north Melbourne. Mirvac will provide investment management, property management, development management and construction services.
Mirvac has around 2,200 build-to-rent lots in its secured pipeline.
“The establishment and capitalisation of the venture supports our vision to increase our exposure to the build-to-rent sector, grow our portfolio to at least 5,000 apartments in the medium-term, and play a key role in helping solve the housing and rental shortfall in Australia,” said Mirvac’s group CEO and managing director, Campbell Hanan.
UBS analysts suggested this week that investors wanting to position for a recovery in residential volumes and earnings are best to put their money into build-to-rent, alongside apartments and manufactured housing estates, rather than house-and-land.
CEFC head of property, Michael Di Russo, said, “The build-to-rent sector is an emerging asset class in Australia with the potential for significant growth, as well as considerable scope to make a meaningful impact on the decarbonisation of the broader residential property sector”.
Each new development project is targeting a minimum average of 7.5-star NATHERS rating and net zero carbon emissions in operations.
Minister for Climate Change and Energy, Chris Bowen, said, “The Albanese Government wants all Australians to be able to save on energy, and save on bills, not just those who own their own home.
“Improving energy efficiency in these apartments is crucial in cutting power bills over the long term for renters, and today’s announcement adds to the $1.7 billion in energy saving upgrades for homes, businesses and communities in the budget.”
Mirvac said that as part of the transaction, it will continue to source and secure new opportunities for the venture from a variety of sources, including from its circa $30 billion development pipeline and through sourcing of off-market and on-market opportunities.
Momentum gains
Build-to-rent is gaining momentum in Australia, with a flurry of recent activity following the federal government offering tax breaks on developments.
The announcement was followed by was followed Malaysian-listed developer UEM Sunrise and US giant Greystar partnering on a project in Melbourne’s Collingwood, Singapore-listed giant CDL making an entrance into the sector, while Dutch pension fund APG Asset Management and Bouwinvest backed a new $1.5 billion Scape Australia Fund, and US giant Brookfield also announced its first project in the country.
Meanwhile, among other recent plays, Lendlease and the City of Melbourne unveiled plans for a $1.7 billion precinct next to Queen Victoria Market that will have hundreds of build-to-rent apartments, while the NHFIC has thrown its support behind the NSW Land and Housing Corporation and the community housing sector’s $32 million build-to-rent development in North Parramatta.
