Greystar, UEM to partner in Collingwood build-to-rent development

UEM Sunrise has partnered with Greystar Capital Partners on Collingwood’s first build-to-rent project

US giant Greystar is taking its Australian pipeline to close to 3000 units in the important build-to-rent market after it struck a deal with Malaysian-listed developer UEM Sunrise on its inner-Melbourne site.

The housing crisis has taken centre stage and the federal government last weekend bolstered its affordable housing fund to a $2bn vehicle. State governments are also stepping up even amid the federal political deadlock about a planned $10bn affordable housing fund.

Build-to-rent operators are becoming active following recently announced tax reforms, which put the sector on a more even footing with commercial buildings, and the government hopes this will boost investment in the growing sector.

Greystar was one of the pioneers and started picking up sites three years ago in Melbourne before more recently pushing into Sydney with the purchase of a site in the high-rise suburb of Zetland.

In the latest play, Greystar will invest in a project in inner-city Collingwood and become the operator of the proposed build-to-rent development, with UEM Sunrise as the developer and delivery partner.

The Hoddle St project is expected to include about 400 units across two buildings with a mix of studios and one, two and three-bedroom apartments. The deal was brokered by Colliers International’s Trent Hobart and Jozef Dickinson.

Greystar Australia managing director Chris Key said the company was actively looking to expand its pipeline of build-to-rent developments across Australia’s main population centres.

“Greystar is committed to creating new housing supply in Australia’s capital cities and providing renters with greater choice of accommodation,” Mr Key said.

“We have the capital and expertise to accelerate the rollout of build-to-rent product and make a contribution to easing the acute shortage of rental accommodation.”

While not a panacea for the housing crisis, big operators now control sites which will deliver more than 17,000 rental homes, and are pursuing strategies that mainly add to middle and higher-end housing.

Greystar is buying in Collingwood at a time when developers are dropping their plans for traditional apartments as off-the-plan sales and financing markets remain tough.

Once completed, the US funds house will operate the planned towers as one of its specialist build-to-rent complexes.

The sector is being promoted as a means of maintaining housing supply with institutional capital while apartment sales are slugged by higher rates and rising costs. They are also billed as a way to provide long-term security of tenure to renters.

Big institutions, including GIC which is backing Grocon’s Home brand, and other offshore players have dominated, including recent site purchases by US group Hines and other global players.

UEM originally had plans for a 23-storey mixed-use “village of towers” in Collingwood. It had picked up the 5390 sqm site at 21-43 Hoddle St, Collingwood, in 2020 for $43m.

UEM has been pulling back. It dumped the planned $330m Zaha Hadid-designed Mayfair apartment project in St Kilda Rd in 2020 after slow sales. But it has completed its flagship development in the Melbourne CBD – the 86 storey project Aurora Melbourne Central.

Greystar’s local unit secured a $1.3bn mandate in 2020 to roll out new projects in the sector.

The company already has Melbourne projects with capacity for about 2000 units across South Yarra, Kensington, Fitzroy, South Melbourne and now Collingwood.

In late 2020, Greystar picked up a South Melbourne site from Singaporean developer Chip Eng Seng for $65m. It is currently under construction to deliver 700 units.