A 1.25 hectare development site within Merrylands’ Town Centre has sold between Sydney developers.
Family owned Coronation Property is paying ASX-listed giant Stockland $41 million for 52-54 McFarlane Street.
The parcel is next door to a Stockland owned shopping centre and a block from Merrylands train station.
Stockland had previously won permission to replace the holding with five towers comprising 562 flats and a 4500 square metre retail component (artist impression, top).
Coronation intends to build five towers – three which will contain build-to-rent stock, it said.
It has set a seven year timeline to build 5000 build-to-rent units in Sydney.
The Merrylands site: 52-54 McFarlane Street
Coronation managing director Joseph Nahas said that following recent Merrylands Town Centre planning control amendments, he seeks to explore increasing the yield on the site more than Stockland.
“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,” Mr Nahas added.
“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.
“We will be incorporating a food hub-dining concept similar to the one seen at our successful development in Liverpool, The Paper Mill, where The Paper Mill Food is driving strong demand for our apartments and likewise, the restaurants benefit from a constant customer base from the residents”.
Coronation director Les Landerer added “this asset, and in particular the retail precinct, will rejuvenate the Merrylands Town Centre through improved public amenity and lifestyle offerings that focus on convenience, flexibility, utility and community.”
“For Coronation Property, this acquisition also represents the next stage in our ongoing commitment to and belief in Greater Western Sydney, as evidenced by our existing projects in Liverpool, Parramatta and Harris Park.”
Merrylands is about 25 kilometres from the Sydney CBD, just south of Parramatta.
Build to rent in Australia
A relatively new concept in Australia – build-to-rent involves a developer retaining the residential assets as investments upon completion.
Longer term, these apartment portfolios are expected to trade amongst investors.
Several property giants, including ASX-listed ones, embraced the concept last via the acquisition of major development sites.
Federal ALP proposed taxation reform around build-to-rent as part of housing affordability initiatives it took to the 2018 election.
Mr Nahas said Coronation Property is backing the 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,” he added.
“Our goal will be to deliver 5,000 apartments over the next seven years, and we believe that with our fully-integrated development and construction business, as well as our proven expertise in delivering multi-family residential properties across Sydney, Coronation Property will play a leading role in the establishment of the build-to-rent sector in Australia.”
Mr Landerer said that in recent years, there has been a “prolific shift” in Australian housing dynamics “which will ultimately spur the success of build-to-rent”.
“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,” he added.
“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.
“We believe that the confluence of economic conditions, the current supply and demand dynamics of the Australian residential market, as well as the change in generational housing and lifestyle preferences, the conditions are ripe for the establishment of an Australian residential build-to-rent sector”.