US real estate giant Greystar has acquired two adjoining sites in central Melbourne where it is planning to launch its first build-to-rent project on Australian shores.
Greystar, which manages and operates an estimated $160 billion-plus of real estate across 200 markets globally, sounded out the Australian market in 2018 after successfully expanding internationally more than a decade ago.
Greystar pointed to the changing demographics that had led to rising urbanisation in Melbourne and Sydney which had continued to effect the significant issue of housing affordability.
The firm has now revealed plans to re-develop neighbouring properties, located on Yarra and Claremont Streets in South Yarra, into two integrated mixed-use projects comprising ground floor retail, approximately 5,000sq m of office space and over 500 build-to-rent apartments.
Law firm Gadens is advising Greystar on the acquisition and said that the acquisition represents one of the last development opportunities in the area.
“The neighbouring blocks were purchased separately in off-market deals,” Gadens said.
Greystar's new $400 million mixed-use precinct will be built on two of the last remaining development sites of scale in the sought-after Forrest Hill Precinct of South Yarra.
Greystar's head of Asia-Pacific Chris Key said as land prices in Australia started to ease, it would help make more build-to-rent projects work.
“A sustained pull-back in offshore buyer demand and financing challenges for both buyers and developers has led to decreasing competition for development opportunities among build-to-sell developers.
“When combined, these dynamics create a set of factors for the emergence of a highly scalable opportunity to establish a new institutional class of rental product in the country.”
Greystar's South Yarra developments won't be the first build-to-rent projects to hit the market with a number of established developers proceeding with new builds regardless of government changes in tax and planning rules.
Grocon pioneered build-to-rent with a development within the Commonwealth Games athletes' village on the Gold Coast and has plans to launch 400 apartments for executive-style tenants in a major build-to-rent project to the heart of Melbourne's Southbank