Greystar is paying Chip Eng Seng subsidiary CEL Australia $65 million for a South Melbourne site permitted for 722 apartments in three skyscrapers.
The United States buyer is instead intending a Build to Rent project possibly with offices and retail.
Fifteen-85 Gladstone Street, on 5984 square metres, was once owned by BPM Corp and before that, MAB Corporation.
Singapore listed Chip Eng Seng, which paid $52m in 2016, holds other local sites including at Northcote’s 221-223 Separation St and in Adelaide, 51 Pirie St which is earmarked for a 27-storey hotel set to return the Hyatt brand to the city.
BTR in Australia ends year roaring
Investa this year described Australia’s BTR sector as “one of the most attractive institutional investment opportunities globally”.
Large scale construction for this stock has been reported about increasingly over recent years; in 2017 local developer Caydon acquired United States properties for this purpose – though at the time said the model wasn’t as viable in Australia as there.
A change in local sentiment has taken place since, following a COVID backdrop flooding the market with permit-ready residential sites, NSW and Victorian government tax incentives, private equity and financing confidence.
More generally, the influx of supply is also expected to improve housing affordability.
In February Greystar, which is part backed by Dutch pension giant APG for its Australian BTR expansion, acquired South Yarra blocks for a project with more than 500 pet-friendly units, and offices (story continues below).
Major Australian BTR players
Other major sector deals and developments this year include in Melbourne:
- Investa and Oxford acquiring a 6916sqm Footscray site – until recently publicly owned – for c770 dwellings;
- Suleman Group incorporating this housing at a Spotswood village;
- Grocon and GIC appointing a builder to construct a BTR based project to replace Richmond Plaza, and
- Mirvac purchasing part of the city’s ex-Convention Centre, where it has earmarked 430 units. The investor holds two more parcels for this purpose in the city.
Mid last year Blackstone backed a Caulfield complex.
Earlier this month fund manager Qualitas announced it would diversify into the sector, seeking three seed inner-Melbourne assets to yield investments worth $1 billion.
BTR site sales outside of Victoria in 2020 include:
- Sentinel Property Group snapping up a former motel on 2999 sqm in Perth’s ritzy Scarborough, and proposing a c24 storey tower;
- Coronation Property paying Stockland $41m for a 1.25ha Merrylands, Sydney, block, and
- Aspen purchasing small (sub $4m) residential developments to repurpose as BTR stock focused on multi-family living – in Newcastle and on the Gold Coast.
Greystar Chris Key told The Australian new entrants want to bring better service and amenity to renting, as well as providing longer term tenure.
“Institutional rental housing can help to solve this issue and provide the housing security that people need,” he added.
In June, Investa and Oxford unveiled a 39-floor BTR project in Sydney’s CBD.
The latter, like Greystar and with Blackstone and Sentinel Real Estate Corporation, are United States based.