Phoenix joint venture with Abadeen targets Sydney’s luxury unit opportunities

The Crows Nest project, branded Koyo, is designed by acclaimed architects Koichi Takada.

Asian private equity real estate investment group Phoenix Property Investors has struck up a joint venture to invest $250m with local luxury and commercial developer Abadeen for a new residential platform that will pump the funds into boutique projects in the surging Sydney market over the next five years.

The move, that will see the pair develop $1bn in property, is yet another marker of the private interest in luxury residential developments, with both local players and offshore-backed developers staking a claim to top-end projects, as the jump in mansion markets spills over to apartments.

“We are very confident in the owner-occupied boutique market as we have seen housing prices escalate – this historically places pressure on the premium apartment market. The lack of supply, difficulty in creating and gaining approvals for boutique sites in prime locations ensures scarcity of product,” Abadeen founder Justin Brown said.

Phoenix’s investment is sourced from committed and discretionary capital in its latest closed equity fund.

With the aid of borrowing, the business, dubbed Platform, will deliver more than $1bn in gross revenue across 15-20 projects. It will target sites that yield between 10–50 apartments, which are in top areas near the CBD, with most projects to generate about $100m in sales, an area below larger listed players.

The Enso Project in Neutral Bay

Abadeen executive director Joseph Tack said Platform was the culmination of three years of planning to build a pipeline of prime infill sites to deliver high quality bespoke projects to owner-occupiers.

“We are fortunate that Phoenix shares our vision for the continued strength in this part of the market and they are a partner that understands development risk and can make informed investment decisions quickly,” he said.

Private buyers are beating larger developers to sites as competition again heats up.

“Competition for sites is stronger today than this time last year, with a focus now on amalgamations and sourcing off-market opportunities wherever possible,” Mr Tack said.

Phoenix director and head of Australian investments, Trent Winduss, said the partnership with Abadeen was the realisation of a long-considered investment thesis, which was “to build a scalable residential development business targeting boutique, quality and desirable apartment living for owner-occupiers in highly sought-after neighbourhoods in Sydney”.

Since inking the tie-up in June, they have secured six projects in the Sydney suburbs of Crows Nest, Naremburn, Cremorne, Mosman, and Neutral Bay that will reap more than $300m in sales. These projects will use $93m of the capital raise, with the remaining $157m for future projects.

Phoenix director Trent Winduss, left, with Abadeen’s Joe Tack and Justin Brown.

The Crows Nest and Neutral Bay projects, branded Koyo and Enso respectively, and designed by architects Koichi Takada, are approved. Koyo comprises 27 mainly three-bedroom apartments and Enso comprises just nine ultra-luxury residences.

The developers are also planning a 58 unit planned project in Naremburn, designed by Rothelowman, with a wider range of apartment sizes.

Platform has picked up two more sites on the lower north shore, buying a Mosman site for 30 apartments and associated retail space, on a site acquired from the NSW government.

It also bought the corner site at 2 Sutherland St, Cremorne, for 14 mainly three-bedroom residences offering bay views. It has also picked up a new site in Neutral Bay.

Abadeen has a two-decade track record and has developed ten residential projects in the north shore from Cammeray to Dee Why, with an end value of more than $500m.

Phoenix has offices across the Asia Pacific. It invests on behalf of global institutions and holds interests locally in Sydney and Melbourne, across residential, office, hotel and non-discretionary retail.

The venture’s confidence in the luxury market is being matched by bigger players including Mirvac and Aqualand.