This article is from the Australian Property Journal archive
MELBOURNE’S city fringe is set for another build-to-rent development, after Oxford Properties and Indi entered into an agreement with PDG Corporation to develop a 42 level tower that will almost entirely be aimed at key workers.
The announcement arrives a week after prolific developer Tim Gurner and Qualitas unveiled their first build-to-rent project in Melbourne, also to be in Southbank, after raising $1.2 billion last month for a new development fund, while Samma Property Group and impact investment firm Brightlight have acquired sites in Southbank and Docklands for build-to-rent projects as part of a $1.7 billion pipeline.
Oxford, Indi and PDG will develop their 434-apartment tower at 132 Kavanagh Street, with 40 of its level to be offered as key worker housing. Melbourne-based PDG will develop the project, and had acquired the former JH Boyd Girls’ High School site two years ago with intentions for a build-to-rent project.
Indi is the build-to-rent platform of Oxford’s local partner Investa. It was launched in the middle of this year, eyeing off a portfolio of 5,000 apartments in Sydney and Melbourne. Among those is a $450 million build-to-rent project in Melbourne’s Footscray, and the Pitt Street over-station development in Sydney’s CBD.
“The Kavanagh Street acquisition grows our pipeline and builds economies of scale for the Indi platform,” James Greener, fund manager for Indi said.
“The acquisition offers an attractive risk-adjusted return with significant upside, supported by strong demographic and demand fundamentals.”
Indi’s pipeline now stands at 1,370 apartments.
PDG plans to commence construction in the second half of 2022, with a two-year construction program.
Alec Harper, head of Australia, Oxford said, “A lack of housing choice is one of the most pressing issues facing major cities across the globe. We are combining our capital and global experience of investing in, growing and delivering build-to-rent businesses and development projects to create new supply and improve housing choice for Australians”.
“Growing our exposure to the Australian build-to-rent sector represents one of Oxford’s highest-conviction investment strategies. Together with Investa, we are assembling a pipeline of high-quality rental schemes in Melbourne and Sydney to ensure that Indi becomes the preeminent operator in the Australian market.”
Oxford currently owns and operates an extensive apartment portfolio across North America, where the sector is firmly established, with a development pipeline of approximately 15,000 units. It is a co-owner of Get Living, a leading UK platform, which owns about 3,000 operational units, with a pipeline of a further 5,000 units.
On the other side of town, PDG Corporation entered into an agreement with Mirvac to develop a build-to-rent tower overlooking Queen Victoria Market.
Melbourne has emerged as the most active location in Australia’s fledgling build-to-rent market. It currently accounting for over 60% of the projects either proposed or under construction, helped by the Victorian government expanding build-to-rent concessions.
Mirvac is one of the most prominent players in the sector, while US giant Greystar has unveiled plans for Australia’s largest development in the inner suburb of South Yarra, following its $1.3 billion multifamily venture fund raising.
The country’s biggest superannuation fund, AustralianSuper recently took a 25% share in build-to-rent and alternative housing developer Assemble.
