Greystar picks Icon for $500m build-to-rent project in South Melbourne

An artist’s impression of Greystar’s $500m build-to-rent project at 15-85 Gladstone St in South Melbourne.

As rental vacancies reach critical lows across the country, real estate giant Greystar has unveiled the builder for its $500m build-to-rent project in South Melbourne, as the Victorian capital emerges as the epicentre of the new industry.

Working with construction firm Icon, the American company plans to build 700 residential apartments across three towers as part of plans to revitalise the Fishermans Bend precinct.

The project will become one of Australia’s largest purpose-built build-to-rent developments, providing much-needed rentals less than a kilometre from Melbourne’s CBD.

Rival companies including Daniel Grollo’s Home operation, Macquarie-supported Local and Hines also have sites in the city. Assemble has nine projects comprising about 3600 units and Mirvac also has several projects.

Groups ranging from Investa and Oxford – via their BTR platform Indi, which has sites in Southbank and Footscray – and Gurner and Qualitas, which have a St Kilda Junction site, are also active.

Greystar’s $500m build-to-rent project in South Melbourne in the Fishermans Bend precinct.

With developments of this scale, Melbourne is the leader in the specialist build-to-rent sector, which is set to play a major role in the housing industry. The move comes less than a year after the approval of another $500m build-to-rent project by Greystar in South Yarra.

The company said its strategy in the Australian market was “to bring high-quality housing options to a broader spectrum of the rental population”.

The Andrews government offers land tax concessions for build-to-rent projects in a bid to increase the amount of affordable housing in Melbourne’s inner suburbs, which Greystar is capitalising upon.

The site in South Melbourne champions sustainability, aiming to be powered entirely by renewable ­energy, featuring rooftop solar and a recycled water pipe network.

It also emphasises community and living experience through public space, and caters to recent Victorian tenancy reform with dedicated pet amenities.

“The projects will create an inspiring space that provides opportunity for community connection – and brings an entirely new way of living to South Melbourne,” Icon CEO Evan Byrne said.

Icon’s Victorian director Dan Crawley (left) with Greystar managing director Australia Chris Key.

Greystar managing director in Australia Chris Key said: “Our vision for the precinct revolves around the scale and rich variety of amenities on offer, which includes wellness and co-working spaces and sophisticated resident lounges.”

The development will have 850sq m of retail space, and aims to create almost 100 jobs upon its completion in 2024, on top of the 1000 full-time-equivalent jobs during construction.

JLL head of capital markets Josh Rutman said the Victorian capital was attracting new entrants.

“We are continuing to see new entrants in the build-to-rent sector looking to acquire major landholdings in strategic locations, particularly in Melbourne where the combination of tax incentives and land pricing make the delivery of BTR more attractive,” Mr Rutman said.

“In a rising interest rate environment, we expect the take-up of BTR accommodation to increase, which will further fuel developer demand for inner and middle suburban sites.”