Oxford Properties has bought a site for a A$450m (€275m) build-to-rent (BTR) project in Melbourne to capitalise on recent changes to state taxes to encourage multifamily developments.

It will be the Canadian investor’s second BTR project in Australia. It is currently developing BTR apartments in central Sydney.

With the latest acquisition in Melbourne’s inner western suburb of Footscray, Oxford’s Australian pipeline has grown to around 1,000 units. The Melbourne site will add appropriately 700 apartments to its portfolio.

Alec Harper, Oxford’s head of Australia, said: “The Footscray acquisition is in line with Oxford’s strategy to actively grow its exposure to Australia and the nascent build-to-rent sector.”

He said the focus would be in core markets that offered scale, access to wider amenity and the right household demographics.

“Oxford has a strong track record delivering transformative build-to-rent precincts in the UK and North America,” he said.

Last month, Oxford bought a 50% stake in the Investa management platform and has appointed the Australian company to implement its strategy to build up a BTR rent business in Australia.

Investa recently created a BTR unit, appointing Jason Greener as its fund manager.

Peter Menegazzo, chief investment officer of Investa, told IPE Real Assets: “This will be a development-led business. And over the next five to seven years, the portfolio could grow to 4,000-5,000 apartments.”

Initially, Oxford is funding the projects from its balance sheet.

“With a growing pipeline of projects, and increasing interest from investors looking to make an investment into the sector, we are considering opportunities to bring in capital partners to help fund the portfolio’s growth,” he said.

This would underpin Oxford’s commitment to build a significant build-to-rent portfolio in the gateway cities of Sydney and Melbourne.

“Definitely,” he said. “State governments’ recent changes to the (BTR) tax regime have been really well received. They have removed a barrier to investing in this sector.”

The Australian property industry is also talking to the Federal Government, hoping to persuade it to extend the withholding tax on foreign investment in commercial real estate under its management investment trust legislation to the BTR sector.

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