Build to rent plan ready for takeoff

Developers are kicking off build to rent towers across Australia with some saying the coronavirus crisis could be a circuit breaker for the industry despite the pressures on private landlords.

Mirvac CEO Susan Lloyd-Hurwitz Picture: Britta Campion

Property developers are kicking off build-to-rent towers across Australia with some saying the coronavirus crisis could be a circuit breaker for the industry despite the pressures on private landlords.

Mirvac last month revealed plans for a complex on the site of the former Melbourne Convention Centre that includes a 33-storey specialist building for rents and launched its Pavilions project, that is partly build to rent, in Sydney’s Olympic ­precinct.

Mirvac chief executive Susan Lloyd-Hurwitz said the rental apartments could be an alternative that would give security of tenure to people at a time when some families might struggle to service mortgages.

Developers had previously argued for tax concessions and special allowances. But now they have moved to get on with their projects, despite the disturbance in the private rental market sparked by rising unemployment and a ban on evictions. Schemes are also being undertaken by developers including Grocon, Salta Properties and US giants Greystar and Blackstone.

In the latest move, Canada’s Oxford Properties Group is getting its first development underway in the Sydney central business district, where it believes more steady rental accommodation will suit people.

However, the schemes must contend with forecasts of lower private rentals driven by the collapse in Airbnb demand that has forced empty properties into the rental market, and swinging the balance in favour of tenants.

Despite these hurdles proponents believe that Australia will benefit from having institutional owners rather than more volatile individual investors, who are likely to be crimped by banks as they are reluctant to extend ­finance as apartment values are sliding.

Oxford has lodged a development application for a 39 storey, build-to-rent residential building, in a major milestone for the Sydney Metro Pitt Street over station development.

The company is also building a separate 39-storey office building at the Pitt Street north metro station entrance. But much of the emphasis is on the build-to-rent project which Oxford is promoting as the first step in forming a build to rent platform in Australia, with a focus on Sydney and Melbourne.

There will be 234 apartments that will range from one to three-bedroom apartments, all with balconies or terraces, with three floors of amenities including a pool with health and wellness facilities, a lounge, providing space to relax or working from home.

Oxford is promoting the tower as offering longer, more flexible lease terms, and security of tenure with homes managed by real estate professionals.

“Pitt Street metro station is a landmark project for the city and, as the first purpose-built build-to-rent building in the CBD, the south building serves as a major step forward for the residential market in Sydney,” Oxford head of Australia Alec Harper said.