AustralianSuper injects $500m into housing complexes to help solve property crisis

AustralianSuper and developer Assemble have committed to building more apartments under a model that allows tenants to eventually own their homes after starting out as renters.

Assemble’s project at 15 Thompson St, Kensington in Melbourne, where the first residents are now moving into their apartments.

The country’s largest industry superannuation fund, AustralianSuper, and developer Assemble have committed to building more apartments under a model that allows tenants to eventually own their homes after starting out as renters.

The fund and the developer, in which AusSuper owns a stake, opened their first project in the Melbourne suburb of Kensington on Monday, and said that the model could be applied nationally.

The style is different from most investments in the sector, where big institutions remain owners of the blocks they are developing, with different pools of renters to cycle through them.

Both models are gaining popularity due to the housing crisis locking people out of home ownership and developers also finding it hard to make traditional projects stack up due to rising costs.

While the pair has yet to identify further sites outside its Melbourne base, AustralianSuper has made a nearly $500m equity commitment to Assemble projects. It is expected to deliver more than 1400 homes by 2027.

Construction on a second development in Melbourne’s Brunswick is underway and more projects in the Melbourne suburbs of Brunswick, Coburg and Footscray are also in the pipeline. More interstate opportunities are also being considered.

AustralianSuper chief executive Paul Schroder.

Assemble is a top developer and operator in the emerging Build-to-Rent-to-Own sector, which the fund is backing. Their model allows residents to secure their rent and purchase price for up to five years, with the option to buy their home at any stage at an agreed value.

With 199 completed apartments, the 15 Thompson St project in Kensington is a proving ground for the concept as the first residents are moving into their homes. The building also offers a fully furnished bookable guesthouse for residents’ guests.

The fund backs the model as it offers a pathway to home ownership, rental stability and services for residents in a building that is rated high on sustainability. The blocks are fully electric and gas-free, with the ability to be powered by accredited GreenPower and no fossil fuels supplied for heating, cooling, cooking or power.

“This will be the first in a pipeline of innovative apartment projects backed by AustralianSuper capital, contributing much needed housing supply in the coming years,” Assemble managing director Kris Daff said.

“With AustralianSuper’s support, we are working to bring our unique housing model to more communities, providing more Australians with an alternate pathway to home ownership, and offering them stability and financial surety in a fluctuating housing market,” he said.

AustralianSuper chief executive Paul Schroder said the fund was supporting the unique housing model.

“As a signatory to the Housing Accord, we are committed to finding scalable solutions that deliver strong long-term returns for members while also responding to the housing supply crisis,” he said,

“Investors like AustralianSuper are well placed to contribute to housing supply, but we’re just one piece of the puzzle. Australia’s housing supply crisis needs collaboration and new solutions, and projects like Thompson Street demonstrate the kind of fresh thinking needed to create more homes for Australians now and strong, long-term returns for members in the future.”