Pro-invest in build-to-rent JV with Japan’s Kajima as housing affordability salve takes off

Build-to-rent has another believer, and Japanese investors have sealed another local property alliance. The solution to the housing crisis has never been more commercially popular.

Fund manager Pro-invest is known for assets like the Kimpton Margot Sydney.

Pro-invest Group will team up with top Japanese construction and real estate firm Kajima to roll out build-to-rent properties across Australia.

The sector is gaining traction as more purpose-built developments open in major capital cities where the ongoing housing crisis is supporting demand from tenants seeking accommodation, often at the premium end of the market.

Large Japanese investment houses are also proving crucial to backing projects in the sector and have supported other listed companies including Lendlease and Mirvac.

Pro-invest said the partnership aimed to address the nation’s escalating housing crisis, with Australia in the grip of its most severe housing shortage in decades due to population growth and an under-supply of homes.

The National Housing Supply and Affordability Council, led by former Mirvac chief Susan Lloyd-Hurwitz, has projected a shortage of about 262,000 homes in the next five years, rising to 1.2 million homes by 2029.

The population is set to jump by 3.5 million in the next decade and more people are willing to rent for the long term rather than own.

“We are excited to announce this joint venture with Kajima, which will bring their construction expertise to our experience in operating world-class hospitality and real estate assets,” Pro-invest chair Ronald Barott said.

“Population growth, higher rents, and an undersupply mean ground up build-to-rent has strong tailwinds for the next decade,” he said.

Kajima has a deep record in construction and design and is one of Japan’s five tier one builders, with annual revenue of $21bn and global operations.

“We see huge opportunities for growth in the BTR sector in Australia and are pleased to work with Pro-invest Group to develop some ground-up projects in key urban centres,” Kajima Australia managing director Tatsuru Isano said.

“These developments will prioritise sustainability, community, and affordability and will help address the shortfall in supply of quality rentals in the market,” he said.

The joint venture will combine Kajima’s residential and commercial construction expertise with Pro-invest’s hospitality capability, being one of the country’s largest hotel players.

Pro-invest said its integrated platform that combined development, operations and asset management, would ensure that the projects are managed across their life cycle, with build-to-rent assets expected to endure.

While Pro-invest is known for its expertise in operational real estate around hospitality as well as flex-living, its venture with Kajima allows for further expansion into ground-up living and build-to-rent projects.

Australia is behind the US and Europe in terms of build-to-rent, but that is set to change. Research by Cushman & Wakefield suggests that the number of specialist units is set to grow almost tenfold by 2027.

Institutions are also chasing new developments with big North American investors backing projects and local super funds getting into the sector.

Pro-invest has about $3bn in assets under management through a combination of discretionary funds, joint ventures, and managed accounts. It has 32 hotels with about 6,000 rooms either open or in its pipeline across Australia and NZ, as well as commercial and mixed-use properties.

Pro-invest in 2023 weighed up the sale of a portfolio of Holiday Inn Express hotels but it decided to retain the properties. Pro-invest also put the Kimpton Margot Sydney up for sale but elected to keep it.