Investa flags living shift as city projects roll out

The top office funds manager is shifting deeper into new kinds of housing as more institutions chase exposure.

Indi Sydney, a build-to-rent project by Investa and Oxford Properties Group.

Investa Property Group – best known for its $13bn premium office platform – is making a major drive into the living space by adding studio living to its expanding build-to-rent operation.

The move is part of a larger shift into the rapidly growing sector, and could take Investa into new sectors, ranging from land lease to purpose-built student accommodation, along with its $1bn pipeline of build-to-rent projects.

Investa chief executive Peter Menegazzo sees the potential for the scale of Investa’s living platform to eventually rival the scale of its office holdings, with the possibility to grow rapidly as it secures capital backers for new opportunities.

“We firmly believe the living sector will continue to grow,” Mr Menegazzo said. “We’ve now got operational capability and we think it can become as big as our office footprint over time, and even get bigger.”

Investa has been working up plans to expand its build-to-rent operation, with the backing of Canadian group Oxford Properties Group. Separately, it has quietly been securing sites in Sydney for its studio living strategy, for which it is seeking new capital partners.

The company is capitalising on its top-flight status as a major property funds platform, and using its on-the-ground knowledge and development pedigree to engage with global capital partners.

“There are other sub-sectors we are actively looking into as well,” Mr Menegazzo said, citing demand from institutions for new areas including the hot land-lease sector, student accommodation, and co-living.

“The institutional mindset is coming at it from the global theme of living,” he said. “Australia is no different; it’s just a little bit more nascent in terms of the establishment of these institutional sectors.”

Investa was an early player in build-to-rent, but sees the chance to expand as it opens its first project in Sydney, above the new Gadigal station in the CBD, and it has two large projects under way in Melbourne in Footscray and Southbank.

One of the apartments in Indi Sydney.

Mr Menegazzo sees the opportunity in the sector, which is benefiting from new rules equalising the treatment of foreign investors, although it has had to overcome soaring building costs and multiple taxes.

He said Investa had high conviction and moved early to start its buildings, which may cost 30 to 40 per cent more to build now.

The company is backing its ability to create assets, compete as part of larger tenders for mixed-use sites that meet its strict criteria, and assess corporate opportunities.

“We’re looking to do more in that space,” Mr Menegazzo said.

“I think investors are very interested in the macro theme. We’ve got a very open mind about how to operate in the sector,” he said, with the emphasis on finding opportunities that will suit the capital.

The building includes a luxury swimming area.

The company’s Indi build-to-rent platform has been the initial focus.

Indi operations director Courtney Raven said the 234-apartment Indi Sydney building had received strong interest when it opened in late November.

It has 234 apartments above the new Gadigal metro station and has drawn interest from urban professionals, students and families for its mix of one to three-bedroom apartments, keen on the top amenities and services and long tenure.

Investa this week topped out of Indi Footscray, its first build-to-rent development in Melbourne, which is its largest project and comprises 702 apartments.

Melbourne has been the epicentre of the industry and Investa is finding widespread acceptance of the product as demand for rentals rises amid the housing crisis.

“While BTR is obviously not the answer to everything in the property market, it’s definitely part of the solution,” Ms Raven said.

Investa head of new business and origination Stuart Rowe said planning and competition for sites made Sydney challenging but he expected further growth of build-to-rent schemes across the city’s suburbs.

He pointed to the group’s Sydney-centric studio living plans as an example of what could be done in the city centre and in inner fringe markets.

“That is where we’re looking to apply the studio living strategy to really leverage the theme that strategy provides,” he said.

Investa is capitalising on the global trend that has seen curated studios and associated facilities spring up in markets like London. The company is locking down its first asset and Mr Rowe flagged the company would kick off a capital raising to secure “like-minded partners” that sit alongside Investa as it rolls out a programmatic expansion.

The move into living also allows Investa to capitalise on its knowledge of property markets that are not suited to its premium office strategy. It is across the shift in tenant markets as they chase higher quality buildings.