Mirvac have struck a deal with private developer PDG to buy a site near Melbourne’s Queen Victoria Markets with plans for a build-to-rent development project in its place.
The site was purchased for $333.5 million and is structured on a fund-through basis, the largest Australia has ever seen. The scale of this transaction demonstrates properly the growth of the build-to-rent sector, which many have been watching with attentive eyes.
Mirvac commenced its first build-to-rent project, The Pavilions, at the Sydney Olympic Park in NSW; the development is set for completion in September 2020.
The deal between PDG and Mirvac will provide a new 490-residence complex with an accompanying existing project that will be redesigned to deliver purpose-built, build-to-rent assets. This will form a part of the $450 million Munro development, adjacent to the $250 million Queen Victoria Market precinct renewal.
“We believe build-to-rent can revolutionise the rental experience with improved choice, quality and security of tenure,” Mirvac chief executive Susan Lloyd-Hurwitz told The Australian Financial Review.
The build-to-rent project, which commences operations later this year, will form the final stage of the Queen Victoria Market renewal. The private company will also oversee the construction of a hotel and shopping areas.
PDG Corporation managing director Vince Giuliano said the pair’s partnership was “unprecedented”.
“We are proud to develop a new benchmark in Australian housing alongside a well-respected company with a shared vision,” he said.
Melbourne Council instigated the precinct renewal with Melbourne Lord Mayor Sally Capp saying they were proud to be looking to the future. The northern end of the city, where the precinct lies, is expected to grow by 22,000 people by 2040.
“These properties would be built for longer-term rental rather than offered for sale. The build-to-rent model is popular in Europe and the United States and offers longer-term security for tenants,” Ms Capp said.
The council hopes that more build-to-rent projects would be considered in the future.