An artists impressions of the Novus on Forest Sydney development.
Asian investors are backing the next wave of build-to-rent towers across Australia’s major capital cities.
Specialist build-to-rent operator Novus has struck a deal with a Japanese investment consortium to kick off a new project in Epping in Sydney’s northwest.
The $350m project, dubbed Novus on Forest, is part of a wave of the developments getting underway across the city’s suburbs at a time when the build-to-sell market has been rattled by rising interest rates, federal budget property tax changes and the Bathla collapse.
The offshore consortium comprising Kanden Realty & Development, the Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development; and Cosmos Initia, will back the project.
The venture marks Kanden’s second investment in a Novus project in Australia, and introduces the other partners to the sector.
An artists impressions of the Novus on Forest development in Sydney.
Novus chief executive Adam Hirst says the consortium’s investment reflected strong conviction from Japanese capital in the local sector – with groups from the Asian powerhouse also backing Lendlease and Mirvac projects – as well as rising confidence in Novus.
“Novus on Forest marks our fourth addition to the Sydney skyline and our first campus-style building, allowing us to showcase a mid-rise product typology within the portfolio,” he said. “Our mid-scale strategy has been proven in practice across both NSW and Victoria, and continues to gain traction with institutional capital, both onshore and offshore, as our company scales.”
Kanden director Masaki Toyooka said the investment reflected the company’s commitment to supporting sustainable housing and strengthening partnerships between Japan and Australia.
“We were particularly attracted to its strong environmental credentials and are pleased to collaborate with Novus, JOIN and Cosmos on this important development,” he said.
Cosmos Australia Holdings managing director Keisuke Muraoka said the company had been “strategically expanding” its presence in Sydney’s build-to-sell market. “We are delighted to contribute to the housing supply in a market driven by steadily increasing population growth,” he said.
Novus on Forest will comprise 310 apartments across five buildings, ranging from six to nine storeys. The campus-style project has a mix from studios up to three-bedroom units, with facilities ranging from a pool, hot and cold therapies, gym, yoga studio, private dining, coworking spaces, and an indoor and outdoor gym, as well as a pet park and rooftop barbecues.
Builder Versatile Construction is working on the project after building Novus on Harris in Parramatta.
Cushman & Wakefield’s Josh Cullen and Louise Burke and Jarden’s Mitchell Schauer facilitated the establishment of the consortium.
The site was acquired in an off-market transaction via Simon and Jordan Elcham of Arra Facilitations for an undisclosed amount from vendor Austino.
In a sign of the market shift, the site bought with an existing build-to-sell development approval in place and it underwent a significant redesign so it was tailored for build-to-rent.
Austino said the Novus scheme had taken the project further than a build-to-sell outcome. “Their redesign for build-to-rent, and the calibre of capital they have brought alongside it, is the best available result for the site and for the community around it,” a spokesman said. Austino is focused on the second stage 2 development at Sydney Olympic Park.
Novus is already been backed on a project in the northern Sydney suburb of Chatswood for a 45-storey build-to-rent tower by Hyundai Engineering & Construction, the Korea Overseas Infrastructure & Urban Development Corporation and Korea Investment Real Asset Management.
Local players are also active as institutional build-to-rent takes off. BDO Australia’s latest sector report said that Sydney was setting the pace for the next wave of the sector’s growth in Australia.
Victoria still has the largest build-to-rent pipeline (24,855 apartments across 65 projects), followed by NSW (17,465 apartments across 51 projects), which is now leading growth in planned developments.