Fledgling Build-to-Rent Platform Targets $2bn Pipeline

Newly-established build-to-rent platform Novus has unveiled plans for a $2-billion development pipeline as the sector continues to attract institutional interest.

Novus, which was formalised in April, is a joint venture between ex-Mirvac employees Adam Hirst and Jason Goldsworthy and equal partner Aliro Group, headed up by David Southon and Daniel Wise.

The pair, which initially approached Aliro for funding, instead partnered with the development group in order to kickstart and fund its development pipeline.

“For investors, the pandemic has sped up the transition to alternate real estate sectors, such as build-to-rent, that was already beginning,” Hirst told The Urban Developer.

“The defensive nature of the cash flows provided by the asset class have further increased its appeal and the opportunity to allocate at scale in Australia is generating strong interest.”

Hirst and Goldsworthy were central to the establishment of Mirvac’s build-to-rent division—Hirst was most recently the general manager for the division and Goldsworthy the national manager of development.

Southon, co-founder of leading ASX-listed fund manager Charter Hall, established Aliro with former Orica global head of property Daniel Wise in 2017. Aliro oversees property development, investment and funds management.

The partnership, which is currently in the middle of a $600-million equity raise, has since identified an immediate pipeline of about $1 billion in projects to be delivered in Sydney and Melbourne.

“From a macro perspective, we are always thinking three-to-four years ahead to the point when we will be finishing an asset and beginning to operate it,” Hirst said.

“Looking forward to 2023-2024, we believe there will be a significant undersupply of apartments in key Australian cities as borders are reopened and migration and international students return.”

The group’s maiden development will be at 153 Sturt Street in Southbank, Melbourne, with Aliro providing the equity for the 1800sq m site.

“This pocket of Southbank is unique as our future residents will get all the benefits of proximity, access and amenity that being located in Southbank provides while living in a lower scale, greener and more residential pocket akin to South Melbourne,” Hirst said.

“The combination of this macro view and attractive sub-market characteristics made this an attractive opportunity for our first asset.”

Hirst said Novus would deliver a new 170 apartment build-to-rent project with two buildings, including a 20-storey tower, designed by Rothelowman.

Novus is also exploring opportunities for a number of sites in Sydney and Melbourne close to infrastructure and transport hubs.

“We understand that build-to-rent is a lifestyle product, first and foremost, designed to allow our residents to live their life on their terms,” he said.

“Whether it be quality in construction and design, quality in our team, quality in the locations of our assets or the service quality we provide to our residents, we strive for quality and excellence in everything we are involved with.”

The nascent sector has been buoyed in Victoria after the state’s delayed November budget which rolled out a 50 per cent reduction from 2022 to 2040 in land tax levied on build-to-rent projects, matching an earlier move by NSW.

CBRE now estimates the present built-to-rent market size exceeds $10 billion with an additional $3 billion to $5 billion in projects under consideration or due diligence.

Hirst and Goldsworthy’s former employer Mirvac is already heavily involved in the sector with a slew of projects built and in development.

US build-to-rent investor Greystar has already acquired two sites in Melbourne, one for a $400-million mixed-use precinct in South Yarra and another in South Melbourne.

Melbourne-based real estate investor Qualitas has also partnered with developer Tim Gurner to forge a $1-billion build-to-rent development fund.

Canada’s Oxford Properties has plans for a $450-million, 700 apartment build-to-rent project in Footscray, while Melbourne developer Assemble Communities has recently outlaid $30 million for a site in the city’s inner north-western Kensington on which it will mix social and commercial-market housing among 400 build-to-rent dwellings.