This article is from the Australian Property Journal archive
AUSTRALIA’S fledgling build to rent sector is taking its next steps with new projects in Melbourne and Sydney’s western suburbs, with Mirvac adding a second major site to its pipeline this summer.
The listed developer will spend $200 million for the former Melbourne Convention Centre site at 7-23 Spencer St from Century Group Australia in the west of the CBD, and plans to develop a an office tower of about 40,000 sqm and a build to rent tower of about 430 apartments as well as additional commercial space.
“This site provides us with an opportunity to add to our high-quality Melbourne office portfolio and grow our burgeoning build-to-rent portfolio in a location supported by strong transport links, ongoing infrastructure investment and favourable demographics,” Mirvac’s chief executive officer and managing director, Susan Lloyd-Hurwitz said.
“By potentially offering large and efficient floorplates in excess of 2,000 square metres, along with exceptional views of the Yarra River, we believe that this will be one of Melbourne’s most sought-after office development opportunities.”
Strong performances from its office and industrial businesses underpinned Mirvac’s fourth consecutive $1 billion annual profit. The developer is nearing completion of its Olderleet tower on Collins St, is planning another 40,000 sqm office tower on the the former Australian Federal Police headquarters at 383 La Trobe St.
Lloyd-Hurwitz said. the increasing demand for rental properties in Melbourne’s CBD “also makes this a perfect location for our next build to rent project”.
In December, Mirvac secured a one hectare site in the northern suburb of Brunswick for nearly $40 million – 18 months after walking away from an agreement to buy the land as part of a larger property – which could way more than 400 dwellings with an end value of over $200 million.
Mirvac’s first build-to-rent project in Melbourne will be on the high-profile Munro site opposite the Queen Victoria Market after the major developer struck a $333.5 million deal with PDG Corporation.
Developer PDG has plans for dual towers on the 6,500 sqm Therry Street site, of 38 and ten storeys, comprising 380 apartments and a hotel, which will need to be tweaked to accommodate 490 build-to-rent units.
Mirvac’s first build to rent asset in Australia, the Pavilions project in Sydney Olympic Park, is due for completion in September 2020.
Further west, Coronation Property has acquired a Merrylands development site of 12,418 sqm in western Sydney for $41 million from Stockland.
In the heart of the Merrylands town centre, adjacent to a Stockland shopping and one block from Merrylands railway station, the 52-54 McFarlane St property is approved for the construction of five towers comprising 562 residential apartments, as well as about 4,500 sqm of ground level retail and basement parking.
Coronation is exploring increased yield at the site, says managing director, Joseph Nahas, as the Merrylands Town Centre planning controls have been amended since the DA approval.
“Our goal is to deliver a mixed-use precinct with a combination of build-to-rent and build-to-sell apartments, as well as a bustling new retail offering for the community that will include a gym, supermarket and a wide variety of food and beverage vendors.
“In our experience, a true mixed-use development enhances the attractiveness of the site – not only for the residents, but the greater community – and our plans for a well-curated ground-level retail offering will provide residents with a superior lifestyle offering.”
Nahas said Coronation Property is backing the built-to-rent concept to succeed in Australia.
“We very much view the Merrylands site as a seed investment for our build-to-rent business – whilst this property sector is relatively new to Australia, it is gaining traction and we see the robust potential.
Coronation Property is aiming to deliver 5,000 apartments over the next seven years, and Nahas said there has been a prolific shift in housing dynamics in Australia which will ultimately spur the success of build-the to-rent success.
“With buyers moving away from the ambition of housing ownership and increasingly into private housing rental, there is an environment where build-to-rent makes more and more sense for property developers.
“This trend towards rental living has largely been evident in the younger generations and is driven by a lack of housing affordability, tighter credit conditions, and changing lifestyle preferences, with millennials seeking mobility, flexibility and convenience.”
A dining component similar that of its Liverpool project The Paper Mill will be incorporated.
Recent research from Allen and Urbis suggests build to rent housing may be the quickest solution to assist in the delivery of almost 1.6 million new homes across Australia over the next 10 years, but existing government policies may prove a roadblock.
According to the latest Rental Affordability Index, all Newstart recipients who are renting are living in poverty. Renting households on incomes below $60,000 per annum have no affordable rentals in our cities, including all capitals and nearly every centre on the east coast.
