M&G Real Estate is partnering with a newly-formed Australian build-to-rent (BTR) company Novus to develop around $A450m (€312m) apartments mainly in Melbourne and Sydney.
Adam Hirst, chief executive of Novus, told IPE Real Assets the platform was seeded with a project in Melbourne’s Southbank, which would offer 173 homes.
M&G Real Estate’s investment is being made on behalf of the US$7.1bn (€6.13bn) M&G Asia Fund, the largest core fund in Asia-Pacific.
Richard van den Berg, portfolio manager of the fund, told IPE Real Assets that the BTR market in Australia was in an early stage, although a sound track record was being established by early projects.
“They have shown good performance,” he said, adding that market fundamentals were strong, particularly with residential housing prices rising steeply.”
Novus, which Hirst set up with fellow ex-Mirvac executive Jason Goldsworthy in joint venture with boutique fund manager Aliro was currently in talks for sites in Sydney and Melbourne to establish a pipeline of projects for its BTR platform.
Hirst said: “Stabilised BTR product is not available in Australia, hence the platform is build-to-core vehicle. We have a vertically-integrated platform which will originate sites, oversee the development process and manage the tenancies and the asset.”
Of heightened competition and prospects for Australia’s BTR market, Hirst said the best comparison was with the commercial office market.
“Currently, in Australia, the institutional office market is worth around A$400bn compared to the residential market at A$10trn.
“Over the next two decades, we think it is conceivable that the BTR market will grow to be 4%-5% of the residential market, a coverage that is still below other global markets.”
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