Lendlease, Daiwa Team Up for Inner-Melbourne BtR Tower

Global construction and real estate giant Lendlease and Daiwa House—Japan’s biggest homebuilder—have announced a deal to deliver a 45-storey build-to-rent tower in the heart of Melbourne.

The partners said they would begin construction on the 797-apartment tower next month, in what is the latest phase in Lendlease’s ambitious $2.9-billion Melbourne Quarter precinct.

The deal comes as Australian Securities Exchange-listed companies seek a bigger slice of the growing Japanese post-pandemic investment pie.

“This announcement highlights continuing demand from our Japanese partners for high-quality opportunities across our global project pipeline,” Lendlease Australia chief executive Dale Connor said.

“We’ve now secured Japanese investment in projects totalling approximately $11 billion in end-development value,” he said. “It also represents a major vote of confidence in Australia’s property market.”

The end value of the Fender Katsalidis-designed building is estimated at $650 million and is the second partnership for the two. The first was when they teamed up to deliver Claremont Hall residences on New York City’s upper-west side.

The partners won development approval for the Melbourne tower last year.

Lendlease will develop, build, and act as the investment manager for the project at 646-666 Flinders Street, on the Yarra River. They will retain a 25 per cent share in the development.

▲ Residents will have access to a variety of facilities, including a 25m lap pool and fully equipped gymnasium with spa, sauna and steam rooms.

The 797 apartments will be a mix of studio, one, two and three bedrooms.

Residents, who are expected to move in around 2026, will have access to a 25m lap pool, bowling alley, karaoke and music studio, co-working spaces, virtual sports and games rooms, a cinema, fully equipped gymnasium with spa, sauna and steam rooms.

Bordered by Collins and Flinders streets, and just a couple of blocks from Southern Cross Station, the build-to-rent development is the final phase of Lendlease’s Melbourne Quarter Precinct, which first got state government go-ahead in 2016.

When completed, it is expected to house 14,000 workers and more than 3800 residents.

The inner-Melbourne project will be Lendlease’s second build-to-rent development in Australia.

While the diversified property developer has built more than 4000 build-to-rent apartments around the world, it was not until this year it made its first foray into the booming Australian sector with a 443-apartment tower in Brisbane’s showgrounds precinct.

▲ The first collaboration between Lendlease and Daiwa delivered Claremont Hall residences on New York City’s upper-west side.

“We see enormous potential in the emerging build-to-rent sector in Australia with institutional investors attracted to high-quality residential real estate for its resilient income profile,” Connor said at the time.

However, the partnership with Lendlease does mark Daiwa’s first entry into Australia’s build-to-rent market.

Daiwa chief executive Koji Morishige said the company was committed to broadening its development footprint in Australia.

“Housing accessibility is front of mind for Daiwa House and this build-to-rent opportunity is reflective of our commitment to assist with increasing the supply of quality and well-positioned rental accommodation for the residents of Melbourne,” he said.