Lendlease wins Japanese backer for build-to-rent play

The new towers in Melbourne are billed as part of the solution to the nation’s housing crisis.

Japanese companies are putting their stamp on the growing build-to-rent market, with Daiwa House backing a new project by local heavyweight Lendlease in Melbourne.

The move follows Mitsubishi emerging as a major backer of Mirvac’s specialist business, as offshore funds continue to make the running in the area.

They are being drawn by the promise that apartment towers being developed by for a generation of renters will deliver out-size returns as the housing shortage bites in coming years.

Lendlease and Daiwa House Australia will develop their build-to-rent apartment development at Melbourne Quarter. The pair are working together on real estate plays around the world and also partnered to deliver Claremont Hall residences in Manhattan.

The development, located at the southern edge of Melbourne’s CBD at 646-666 Flinders St, will be the second build-to-rent residences to be delivered by Lendlease in Australia as it continues to grow in the area.

Lendlease will develop, construct and act as the investment manager for the project, which has an end value of about $650m. Lendlease will retain a 25 per cent interest in the development.

Daiwa House is Japan’s largest home builder and one of Japan’s largest property developers, with over six decades of experience in single-family housing, rental housing, commercial facilities, logistics and condominiums.

The deal marks Daiwa House’s entry into Australia’s build-to-rent market and reflects confidence in Melbourne and the build-to-rent asset class.

The site will have 797 homes in a mix of studio, one, two and three bedroom-apartments spanning 45 levels. Residents will have access to first-class amenities and communal spaces including a lap pool, bowling alley, karaoke and music studio, co-working space, virtual sports and games rooms, cinema, fully equipped gym with spa, sauna and steam rooms, with a dedicated on-site concierge.

Bordered by Collins and Flinders streets, and near Southern Cross Station, the build-to-rent development forms the final piece of Lendlease’s Melbourne Quarter precinct.

The overall development will house 14,000 workers and more than 3,800 residents on completion. Construction is due to commence in August, with residents to move in from early 2026.

“Daiwa House’s investment in our build-to-rent project in Melbourne further strengthens the relationship between our two organisations as we bring the best of our shared global expertise to this development opportunity,” Lendlease Australia chief executive Dale Connor said.

“This announcement highlights continuing demand from our Japanese partners for high quality opportunities across our global project pipeline – in total, we’ve now secured Japanese investment in projects totalling approximately $11bn in end development value. It also represents a major vote of confidence in Australia’s property market.”

Daiwa House Australia CEO 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.

Originally published as Lendlease wins Japanese backer for build-to-rent play