Resources
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
A 46-storey build-to-rent project at Melbourne’s Southbank that is in the planning has come to market.
Run All International has lodged amendments to an existing permit for a large-scale residential development, which if approved would allow 455 apartments atop a 346-key, high-end hotel.
The developer intends to retain the hotel component, while forward selling the build-to-rent part of the project, according to Melbourne-based brokers Franklin St.
Franklin St principal Edward Quinn said the deal would allow investors to lock in a premium apartment pipeline without needing funding until the first quarter of 2027, when the development is expected to be completed.
“All delivery and planning risks are being borne by the developer,” Quinn said.
The project at 127-129 Kavanagh Street first won planning approval in 2011, at which time plans called for 794 apartments.
However, the 1450-square-metre site then changed hands for $16 million in June, 2015, according to online documents.
Four years later, Melbourne architects Fraser and Partners updated the design for the two towers, reducing the overall scale and adding an hotel to the mix.
Critically, the developers agreed to incorporate the former Austral Otis engineering works building—once home to one of the biggest manufacturers of lifts in Australia—into the design.
The original plans had called for the building’s demolition.
Under the proposed amendments the build-to-rent floors would include communal kitchen, lounge, bar, terraces, gymnasium, library and co-working space. There would also be a rooftop basketball court, pool and bar.
Brokers Franklin St would not be drawn on who might operate the hotel, saying only the developers were looking to hold ownership of the hotel and that negotiations were “in the final throes”.
However, when re-worked plans were lodged in 2019, architectural renders showed JW Marriott signage on the development.
Quinn said he expected fund-through deals to become more common in the build-to-rent sector.
“At the end of the day build-to-rent is very similar to retail or the office markets in that they're institutionally-owned,” he said, “but a lot of the institutional capital can't take planning and delivery risk.
“Because it’s such a new market, the only way for them to get access to residential is through the platforms that are currently existing or for a developer to build for an institutional group.
“So from a developer’s point of view it’s not too dissimilar to just building and selling the apartments, because in the end the developers are walking away from the building, but they’re just selling it to one purchaser.”
Melbourne’s Southbank is becoming something of a magnet for build-to-rent development.
Home, a build-to-rent development and investment business formed in 2017, completed the city’s first project—a 59-level tower in Southbank—in August, 2022.
Real estate investment manager, developer and operator Investa has partnered with Oxford Properties and Indi to develop a 434-apartment tower, also in Kavanaugh Street. It is due for completion late next year.
And Gurner Group’s revised Southbank tower project at 334 City Road was approved in December, 2021.
“Southbank has a good rental price-point and the demographics are very attuned to apartment and high-rise living,” Quinn said.
He said statistics showed 99 per cent of Southbank residential was apartments, and people living there were typically aged between 20 and 39 years.
“It’s 56 per cent non-family household, so there are a lot of singles and a lot of couples, but not that next level of families,” he said. “And they are typically renters.”
Quinn is one of three brothers who put together Franklin St. as build-to-rent developers and consultants in 2020.
The expressions-of-interest campaign for the Kavanaugh Street development closes on October 20.
