Build-to-rent platform Local has acquired a 421-apartment BTR project in South Melbourne through a development agreement with Blue Earth Group.
The 40-level project at 245 Normanby Road will feature one, two and three-bedroom apartments, as well as 1,400 sqm of communal space.
The project’s amenities will include a lap pool, private dining, games room, yoga room, gym, lounge/dining facilities, cinema, dog wash, outdoor playground and outdoor lounge.
In addition, the ground floor will comprise coworking space, e-games, retail tenancy and the introduction of a communal cafe/wine bar.
The development will commence construction in October this year, with the building to be operational by Q1 2025.
Blue Earth Group will work alongside Hamilton Marino to deliver the BTR project on behalf of Local.
Local refined the project was refined to include adding more communal space, enhance the ground floor offering and enhance the project’s ESG credentials by creating a fully electric building that will be carbon neutral in operation.
Local Co-CEO and Founder Dan McLennan said the market fundamentals for BTR were particularly strong and continued to gain pace.
“The scale of this particular project supports our model of incorporating ‘salt and pepper’ impact housing in our developments and is just one of many BTR projects currently in the Local pipeline,” McLennan said.
Local Co-CEO and Founder Matt Berg said the deal demonstrated Local’s capability to partner with developers and builders to deliver fund through and turnkey transactions.
“These types of transactions are quite common in the UK market and we expect to see more of them in the Australian market as developers with great sites realise the need to deliver a specific type of residential project that is tailored to our customer’s needs,” Berg said.
“Of the five similarly structured deals completed in the BTR space since its inception, Dan and myself have managed three of them.”
“They are significantly more complex than a typical acquisition and certainly require an investment in time and collaboration to ensure you set the right foundations for the project and ensure everyone’s interest is protected along the journey.
“Collaboration is part of our DNA at Local and we have built up considerable expertise in this area at both Local and in our previous roles.
“This is a specific strategy for us moving forward as these types of deals provide the opportunity to partner with experienced developers like Blue Earth and allocate the development risk and opportunity between owner, developer and builder in a way that is fair to each.
“In the current environment, it also allows us to acquire for a fixed price.”
In November last year, Macquarie Asset Management funded Local’s first BTR asset, a 500-apartment project at Kensington in Melbourne’s inner north-west.
The new deal comes as Blackstone, the world’s largest real estate investor, launched an Australian BTR platform, Realm Australia, with assets in Melbourne and Brisbane this week.
Recent Cushman & Wakefield research found Australia’s BTR market was expected to grow from 1,859 homes earlier this year to nearly 16,000 by 2027 based on existing projects at the time.
The research found that 14 institutional investors had been developing 12,848 units across 40 BTR projects nationwide – worth a combined $9.6 billion.
245 Normanby Road, South Melbourne.
