Greystar Real Estate Partners has acquired two existing office buildings for re-development in the Inner Melbourne market of South Yarra, Australia, on behalf of its real estate funds.
Greystar acquired two adjoining properties on Yarra and Claremont Streets in the suburb of South Yarra. The firm is expected to re-develop the properties into an integrated mixed-use project comprising attractive ground floor retail, approximately 5,000sqm of high-quality office space and over 500 rental units across two towers. The properties represent two of the last remaining re-development sites of scale in the sought-after Forrest Hill Precinct of South Yarra.
“The Australian rental housing market is notable for its lack of purpose-built, professionally managed product – renter demand in the country has primarily been met by private owners of build-to-sell units, who do not have the expertise to properly manage properties and promote positive renter experiences,” said Adam Pillay, Senior Managing Director at Greystar.
“The market also continues to see declining rates of homeownership as affordability remains a fundamental concern. At the same time, a wave of younger Australians are making the active decision to rent in locations offering the attractive lifestyle, entertainment and convenience that they desire, and prioritise these factors over homeownership. In addition, a sustained pull-back in offshore buyer demand and financing challenges for both buyers and developers has led to decreasing competition for development opportunities among build-to-sell developers. When combined, these dynamics create a set of factors for the emergence of a highly scalable opportunity to establish a new institutional class of rental product in the country.”
“Australian renters deserve the same higher standard of service-orientated and amenitized housing that is available in the major urban centres around the world, in contrast to what has traditionally been an inferior rental experience here in Australia. The proposed project is an important step in advancing our strategic objective of bringing high-quality housing options to a broader spectrum of the rental population, providing them with greater choice, diversity and higher standards,” said Chris Key, Managing Director for Greystar in Australia.
“One of the most important issues for renters in the current market is their security of tenure. Most private rental housing owned by mum and dad investors create a scenario where renters cannot rely on their ability to renew leases on an ongoing basis. Institutional rental housing can help to solve this issue and provide the housing security that people need. We are committed to the opportunity to establish a new institutional asset class in this country, by creating purpose-built, professionally managed rental housing and providing better housing outcomes overall. With time, the asset class will attract both domestic and international institutional investment given the stable, robust and predictable nature of the cash flow and enable the growth of the sector to fill an important part of our housing continuum that is currently missing in Australia.”
“We look forward to working collaboratively with the various levels of Government to ensure we can deliver practical housing solutions, particularly in supply and affordability constrained markets like Melbourne and Sydney. Institutional multifamily housing has the ability to significantly accelerate housing supply and fill the shortage in housing that is rapidly emerging in our major cities.”