In an unusual move in these days of rising real estate prices, a Melbourne developer has purchased a major site for a ‘build-to-rent development’.
Grocon has apparently purchased 256-266 City Road, Southbank for $35 million. Although build-to-rent is an established practice in the UK and USA the concept has yet to take hold in Australia. Quite simply it involves building a multi-apartment building with the apartments then being retained by the developers or by institutional investors, such as super funds, for the long term rental market. Present market conditions and government tax breaks currently favour build-to-sell developments. Signs that the residential apartment market may be slowing, coupled with the long-term rental market consistently growing, could conceivably make the concept more attractive.
The purchaser, Grocon, which began in the 1960s specialising in small concrete works, pavements and pools, is now one of Australia's largest privately owned development, construction and funds management companies. Their past projects include the Melbourne Crown Casino, Eureka Tower and AAMI Park and 1 Martin Place, ANZ Tower and 5 Martin Place in Sydney.
The site, according to Southbank Cityscope, is 1,263 sqm in size and is currently occupied by two, two-storey vacant retail buildings. They last traded together in 2016 when they were bought as a residential development site for $27 million. Their proximity to the Melbourne CBD, Yarra River precinct and the Crown Casino make the sites ideal for any residential development.