Fledgling build-to-rent platform Apt.Residential is wasting no time deploying its recently supercharged $1.5-billion development war chest.
It has begun initial site works on a $280-million “village-style” build-to-rent project spanning an entire block at Meadowbank in Sydney’s inner north-west.
The development will comprise 291 studio, one, two and three-bedroom apartments across four buildings rising up to eight storeys.
As well, it is touted to become a new vibrant hub for Meadowbank, 15km from the CBD, including more than 4000sq m of street-facing retail and hospitality amenity.
Last month, the Sydney-based start-up announced it had won the backing of Dutch pension fund manager PGGM, which has committed an initial $700 million to the new platform to roll out 2500 apartments during the next five to seven years.
The partnership has bolstered Apt.Residential’s seed capital to a total of $1.5 billion that will fund the development of up to eight build-to-rent projects, most of them in Sydney.
Apt.Residential co-founder and managing director Matt Carolan told The Urban Developer the partnership had been more than two years in the making after he made a cold call to PGGM.
“I picked up the phone and called the director in the Netherlands and he gave me two minutes of his time … they call it an elevator pitch,” the former chief investment officer at student accommodation provider Urbanest said.
“And from that conversation in 2021 we spent probably the first 18 months just getting to know each other and trusting each other.
“I let them a little bit into my world, my thinking on what I wanted to do. And then they started opening up and sharing with me what their desire was in terms of investing in residential in Australia.
“They have a very strong social conscience and in their own country they’re very supportive of housing for the general community at fair rents.
“And so it became quite clear, quite quickly, that we had similar ideas and from there we formed a strategy and business plan together,” Carolan said. “It took two-and-a-half years to set it up properly and then move into the partnership.”
Apt.Residential co-founder and operations director Michael Hogg said the Meadowbank development was the maiden project for the partnership but part of long-term play in the Australian housing sector by PGGM.
“It’s by no means an opportunistic short-term play. They really want to lean in and help us be one of the contributors to overcoming the housing supply issues we’re facing,” the former Investa build-to-rent general manager said.
The residential vacancy rate in Meadowbank sits at a six-year low of 2 per cent, reflecting the broader state of the Sydney rental market.
Demolition has started on the 7700sq m site, which was acquired pre-approved from a family office that had progressively consolidated the entire block since the 1970s.
It sits on the doorstep of Meadowbank train station.
“The fact that it had a DA was great because it gets us on site more quickly,” Carolan said. “But it was more to do with the size and the location’s appeal. It’s pretty well the last large-scale site in that area to be developed…and the perfect place for us to deliver much-needed housing, retail and hospitality amenity.”
Carolan described the Meadowbank scheme designed by Curzon and Partners as a “low rise village-style” build-to-rent development.
“You won’t see us doing any highrise…no 60-storey towers in Parramatta or Southbank” he said. “We’re very focused on the community side, the human side and that highrise style of living isn’t the sort of community we see ourselves managing.”
Given the prevailing housing supply issues across Australia and the appetite from capital to invest in its residential sector, Carolan said build-to-rent was “definitely getting traction and here to stay”.
Not only that, he believes there is still plenty of room for growth and new players like Apt.Residential.
“When the time is right we’ll be in Melbourne, we’ll be in Brisbane and tier-two cities like Newcastle. The business plan was always that the first few assets would be secured and settled in Sydney but it’s a national mandate.”
The Meadowbank project is due for completion in late 2026.
