With the ink barely dry on the Managed Investment Trust legislation reforms of last year, institutional investors are making moves in Australia’s build-to-rent sector.
Local has snapped up a prized Southbank site for a $270-million development in one of the first major transactions since the policy changes that were designed to stimulate institutional investment in rental housing.
The project at 65 Haig Street in Melbourne’s Southbank would deliver 312 residences and boost Local’s total asset pipeline beyond $1.34 billion.
The deal structure means Local will develop the site while original developer Samma Property Group remains as landowner.
The site of the planned 39-storey tower is on the CBD fringe, 200m from public transport and 500m from South Melbourne Market.
Construction is scheduled to begin in the third quarter of this year and completion is targeted for late 2027.
Local head of investments Chris Axsentieff said the project would “spur the kind of institutional investment that the recent legislative changes seek to encourage”.
Planned for the development is 1250sq m of resident amenities that includes co-working spaces, health and wellness facilities, an indoor heated pool, sauna and steam rooms, gym, rooftop lounge, private dining area, entertainment spaces and pet facilities.
The development does not have car parking, reducing building costs and aligning with urban living preferences, the developer said.
The project targets an undersupplied rental sector in the Melbourne market—74 per cent of apartments will be configured as studios and one-bedroom units aimed at singles and couples.
Local said it was committed to affordable and social housing, maintaining a baseline rule that 10 per cent of its projects be allocated to what it calls “impact housing”—a mix of social, affordable and specialist disability accommodation.
“Where we have seen build-to-rent be so successful around the world is in that middle range,” Local co-founder Dan McLennan said.
“We saw a huge need for it, and we believed within build-to-rent there would be a big cohort of people who would have a big focus on the values of their landlord.”
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The Southbank site was earmarked for a conversion to 100 per cent affordable housing under a previous amendment application.
The site was purchased by Samma through its SDJ Property Twenty Second company for $12.5 million in 2020-2021.
The Southbank acquisition follows Local’s completion of its $380-million Local Kensington project.
Also this week, an a separate transaction, Bensons Property Group acquired another Samma site at Docklands for just over $20 million.
The 4509sq m Lorimer Street property, which comes with approval for a 31-storey residential tower, is Bensons’ first major move since exiting voluntary administration this month.
