Global multifamily developer and operator Greystar has raised A$370m (€227m) in the first close of a new fund in Australia.

IPE Real Assets understands that Dutch pension fund manager APG has invested around A$350m to become the first major investor in the fund.

The investment has enabled Greystar to hold a first close and to commence its first project in Australia.

It is also understood that Greystar is in discussions with other global institutional investors.

Greystar’s managing director for Australia Chris Key declined to comment on prospective investors, but he told IPE Real Assets that Greystar had assembled a large development site in South Yarra, on Melbourne’ s city fringe, for its first project, which would have an end-value of A$400m.

“We will build 500 apartments on the site, which will include retail and offices on the lower floors,” Key said, making it the largest build-to-rent (BTR) complex in Australia.

Greystar is going through local government approvals and expects to start construction next year, with completion scheduled for 2023.

Key said he is also looking at other sites in Melbourne, which have capacity for 900 apartments. “We are hopeful of closing on these transactions in the first half,” he said.

Suitable sites near amenities are more readily available in Melbourne than Sydney, he said, and the demographics in Melbourne were more conducive to a multifamily rental market.

“The economics of investing in Melbourne are more favourable, based on a risk-adjusted basis,” Key said. “While there is also a real need for this product in Sydney, the economics are more challenging.”

Key said the Victorian government was ahead of other state governments in levelling the playing field in regard to tax between BTR and build-to-sell projects.

“Hopefully, we will see more measures to help the sector,” he said. “At the moment, BTR operators/investors are being penalised, and the imbalance needs to be rectified to help the sector develop.”

By comparison, he said, the UK government has been proactive, offering initiatives to help the sector.

Greystar has so far developed around 4,500 BTR apartments in the UK. “If we can have a pipeline of in excess of 3,000 apartments in Australia over the next three years – that would be a good outcome,” he said.