ASX-listed Cromwell Property Group and industry super fund First State Super are the latest players making moves into Australia’s growing build-to-rent sector.
Cromwell has lodged a development application for its 700 Collins St site in the Melbourne CBD, intending to transform the seven-level, A-grade office building into a 55-storey tower with 13,000 sqm of office space, a 4.5-star, 182-room hotel, and 265 apartments.
Part of the residential component will be used as build-to-rent units, which will offer concierge services, a café, swimming pool and other amenities.
Meanwhile, First State Super has announced a partnership with real estate fund manager Altis. They will buy 61 apartments at A-5A Cliff Rd and 6-10 Carlingford Rd in Sydney’s Epping, and lease them at 80% of the area’s market rent.
They will be managed by community housing provider, Evolve Housing’s Echo division. Tenants would need to meet certain income and asset thresholds to be eligible to live in the complex.
UniLodge operates more than 70 student accommodation residences in every state of mainland Australia and in the New Zealand cities of Auckland and Wellington.
The new BTR business, Essence Communities will offer services to investors and developers of build-to-rent, or multifamily accommodation.
Demand for more affordable housing and secure lease terms in Australia has prompted more enthusiasm for the sector. Investors and developers have been turned off by projected returns – typically 5% or below – which are well below those of build-to-sell projects.
Major players already involved in build-to-rent include Mirvac, which recently struck a $333.5 million deal with PDG Corporation for the high-profile Munro site opposite Melbourne’s Queen Victoria Market, to go with its Pavilions project in Sydney Olympic Park that will seed a $1 billion build to rent club formed with the Clean Energy Finance Corporation.
Also in Melbourne, Salta Properties projects in Richmond and in Docklands, and last year the group struck an agreement with Abacus Property Group to seek joint venture opportunities in the sector. The first build to rent approval in the state was for a 60-level apartment block in Southbank on a City Rd site acquired by Daniel Grollo’s Grocon.
The former 2018 Gold Coast Commonwealth Games athletes’ village site is one of the few operating examples in Australia. UBS Asset Management and Grocon have converted 1,251 units into rentals, and a UBS-managed trust owns the project.