BUILD-to-rent developer Assemble has entered into a partnership with Housing Choices Australia that will see the national not-for-profit housing provider manage its affordable housing units across a 3,300-dwelling pipeline.
The initial tranche of projects delivered as part of the partnership will facilitate about $1.5 billion in long-term institutional capital investment, according to the parties.
Housing Choices Australia will manage and allocate tenants within the low-income housing component of each development, which will make up at least 20% of the dwellings. Assemble will deliver the balance as affordable rental housing.
The housing will be delivered under long-term ground lease arrangements across six of Assemble’s development sites in inner and middle-ring Melbourne, including a Carinish Road site in Clayton.
Assemble last month revealed a former confectionary site and now distribution centre in Kensington will make way for its third alternative residential development in the suburb by Assemble following a $30 million deal.
Kris Daff, Assemble’s managing director, said the timing of the new partnership is “critical” as Australia has an affordable housing shortfall in excess of one million dwellings that will need to be met by 2036.
“At a time that has been socially and economically devastating for Victoria, fuelled by uncertainty in housing tenure and barriers to home ownership, our communities need support now more than ever to ensure we do not reach crisis point.”
Assemble said groups offered tenancy may include women experiencing domestic violence, young people living with disabilities, or key workers on low-fixed incomes that provide essential community services.
“Build-to-rent is a scalable model, and when executed to its best effect, it has the potential to meet our nation’s demand for secure-tenure affordable housing,” Daff said. “We see mixed-income communities as a blueprint for the future of Australian housing.”
Assemble has a pipeline of over $3 billion of privately funded rental housing with about 5,000 dwellings. The country’s biggest superannuation fund, AustralianSuper took a 25% share in Assemble last year.
The build-to-rent sector remains in its infancy in Australia, but is being embraced by major institutional players and smaller developers alike, and pointed government support for the sector is slowly arriving.
“Build-to-rent recognises that there are very significant unmet housing needs in Australia couple with a strong desire by institutional investors to diversify and contribute solutions to the housing crisis,” Housing Choices Australia managing director, Michael Lennon said.
In Melbourne’s northern suburb of Brunswick, diversified developer Mirvac and Milieu have lodged a town planning application for a build-to-rent project with 500 apartments on a one hectare site, while Mirvac has received approval for a $1 billion build-to-rent and office development in the CBD.
Canadian giant Oxford Properties is furthering its foray into the sector with a first project in Melbourne valued at $450 million in the western suburbs.
Lennon said the community housing sector offers ideal partnership opportunities because of its depth of experience in managing tenancies and communities cost-effectively.
“International examples of build-to-rent offer a wider array of housing choices, enrich city communities, benefit local economies, and most importantly, take pressure off the housing system overall.”