Investec Australia has recently completed its “rent-then-buy” affordable housing project ahead of schedule in Bowden in what it says is market proof that affordable housing can be successfully developed by institutional investors.
The investment bank developed and managed the $30 million Bowden “B” Apartments which included a large proportion of affordable housing.
Located on the north-western corner of the Adelaide CBD the Bowden development comprises a mix of “at market” and key-worker stock which were offered to a mix of workers with a discounted rental scheme to enable them to purchase their home.
Nils Miller of Investec Australia’s Infrastructure Finance and Investment team said the development pre-sold most of the 54 market-priced apartments.
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Key workers, including health care professionals and hospitality and hotel workers, now occupy all of the affordable dwellings, and more than 90 per cent have already taken up the option to purchase their home, achieving a successful path to home ownership.
“The rent-then-buy affordable housing program offers key workers a heavily discounted rental rate for a maximum period of three years while they save for a deposit to purchase their home,” Miller said.
“It is exciting to see that in less than 12 months most of the renters on the scheme were able to realise home ownership well ahead of the three-year timeline.”
Investec established the social and affordable housing aspect of the project in partnership with Community Housing Limited and Renewal SA.
Renewal SA, the South Australian Urban Renewal Authority, has been actively developing Bowden into a vibrant residential and commercial hub since 2012.
Bowden is located just 2.5 kilometres from the Adelaide CBD and has been at the centre of a renewal transformation away from its roots as a manufacturing and industrial base.
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Miller said that Investec believes that this development provides a template for State Governments to provide an innovative way for workers to access the property market with limited risk to government finances.
Investec is eyeing off opportunities in New South Wales through the NSW Communities Plus program which is a program of integrated housing developments delivered in partnership with the private, non-government and community housing sectors in Sydney and regional NSW.
It promises the development of 40,000 private housing units, 500 affordable housing dwellings and 23,000 new and replacement social housing units. A range of major sites and smaller neighbourhood projects are at various stages of planning and development.
Recent figures from the Housing Industry Association show housing affordability is at its highest level in 20 years with the exception of Sydney and Melbourne.
The HIA said affordability conditions in Sydney are still more challenging than any other city. After Sydney, Melbourne has the second highest mortgage repayment burden.