US giant to make $1.3 billion splash in build-to-rent

United States-headquartered development giant Greystar Real Estates Partners is establishing Australia’s biggest venture into the build-to-rent sector, raising $1.3 billion to develop more than 5,000 new rental properties.

Build-to-rent development, where developers create projects with the intention of renting individual units rather than selling them, is starting to gain significant momentum in Australia, with a throng of major local and international developers announcing major project plans.

The sector is considered to be a key element of addressing housing affordability and undersupply, particularly in overheated property markets.

Developers to date have largely been focused on Sydney and Melbourne, however there has also been major build-to-rent progress made in Perth and Brisbane. 

Major players in the sector include ASX-listed developer Mirvac and Melbourne-based GURNER, as well as international groups such as Vellum Funds Management and New York-headquartered Sentinel Real Estate Corporation. 

Greystar had previously announced it had acquired two properties in Melbourne’s South Yarra, where it intends to develop a build-to-rent project, and recently acquired a second plot for development in the Fisherman’s Bend urban regeneration precinct in South Melbourne. 

The developer plans to start construction on both projects later this year, with the developments to comprise more than 1,300 dwellings.

Chris Key, managing director of Greystar Australia, said the company had identified a gap in the Australian real estate market for build-to-rent projects.

“The quality of rental experience that build-to-rent offers residents in major urban centres around the world is not on offer here in Australia today,” Mr Key said.

“We plan to provide future focused, next generation rental housing with an abundance of customised amenity and communal spaces that are curated to provide a world-class resident experience.

“These projects will be designed to align and adapt to resident needs in a rapidly changing world.”

Headquartered in Charleston, South Carolina, Greystar’s portfolio comprises more than $US200 billion of real estate across 200 global markets.

The company is the biggest operator of apartments in the United States, with more than 713,000 dwellings under its management.

Greystar is partnering with Netherlands-based pension fund manager APG Asset Management and Canadian developer Ivanhoé Cambridge on its Australian foray.

“With the resources and global expertise of our trusted capital partners, we have the opportunity to deliver over 5,000 new homes for Australian renters to enjoy for many years to come,” Mr Key said.

“As we face a major downturn in high density construction in the coming years, this partnership provides us with the opportunity to make our own contribution to Australian job creation and the economic recovery post COVID-19.”

APG Asset Management Asia managing director Graeme Torre said he believed it was just a matter of time before build-to-rent gained a foothold in key Asia-Pacific markets.

“It is no surprise to us that major investors such as Ivanhoé Cambridge have committed to the sector alongside APG in a sophisticated market such as Australia.

“With continued urbanisation being a key requirement if we are all to have a change of meeting climate goals and the consequent need to provide more housing options, build-to-rent presents as an essential asset class beyond just the economics.”