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Canadian real estate investor BentallGreenOak and Switzerland-based Partners Group have acquired a 2307-square-metre site in South Brisbane to develop the first of what they say will be an Australian build-to-rent portfolio of up to 1500 units.
Through their local partner, investment manager GreenFort Capital, the global investors paid about $20 million for the 2 Cordelia Street site – in line with what it last traded for in 2016 – in a deal that settled this month.
The 30-level, 364-unit project, on which construction is due to start mid-year, is the first of what GreenFort said would reach a total 1200-1500 BTR units across Brisbane, Melbourne and Sydney.
The investment is part of a growing wave of BTR investment that commercial agency Savills says will produce a record 10,500-plus new apartments in 2024 alone.
“Australia has one of the highest rates of urbanisation and population growth, and one of the lowest residential vacancy rates in the developed world,” said GreenFort Partner Adam Vaggelas.
“These trends, together with increasing housing affordability constraints, present a compelling opportunity to deliver quality and professionally managed apartment stock to urban locations.”
The properties will be managed by BTR operator Canvas, a business Mr Vaggelas and his GreenFort partner Nick Singleton founded.
It is the first Australian investment for BentallGreenOak, a $US70 billion ($98 billion) global real estate investor owned by Toronto-listed financial services company Sun Life Financial.
Zurich-listed Partners Group, a private markets firm with $US127 billion-worth of assets under management – $US18 billion of it in real estate – is more familiar with Australia, having joined investors including Canadian pension fund OPTrust in a 240-megawatt wind farm in Ararat in south-west Victoria in 2015. It has since expanded its investment in energy.
No builder has yet been appointed to the Cordelia Street project, which will have a $200-plus million end value. Cushman & Wakefield agent Andrew Gard, who marketed the property with his brother Michael, declined to comment on the land sale.
In a new report, Savills says about 2800 institutional grade BTR apartments had been completed nationally by the end of 2021, with more than 5000 under construction and 2,300 forecast to complete this year.
More than 25,500 BTR apartments are in the pipeline to be delivered over the five years to 2026, with the market heavily skewed towards Melbourne, where more than 60 per cent of supply is located. Sydney suffers the greatest barriers to entry, including the cost of land and the planning environment.
Investors were seeking to achieve scale quickly, Savills director of operational capital markets Paul Savitz said.
“We expect consolidation in the future, as has happened in BTR markets globally,” he said.
“As BTR continues to mature as an asset class, we expect greater liquidity and economies of scale will put downward pressure on the sector’s risk premium.”