New $1.5bn partnership to invest in Aussie BTR sector

Oksana Patron

4 November 2022

Two real estate investors, Hines and Cadillac Fairview, the real estate arm of the Ontario Teachers’ Pension Plan, have formed a partnership to develop and acquire up to $1.5 billion of assets in the Australian build-to-rent (BTR) sector.

Under the terms of the deal, both investors said the partners would develop, own and operate purpose-built BTR assets across Australia which would be seeded by three BTR development sites, while leveraging their combined expertise in the residential sector.

In May, Hines announced its third BTR acquisition in Australia in South Melbourne, which offered 400 BTR units. The prior two acquisitions, demonstrating the firm’s commitment to the Australian BTR market, were made in Brunswick and North Melbourne.

The partnership’s investment strategy would focus on projects in “vibrant submarkets close to transportation, employment hubs, diverse retail offerings and entertainment centres” and would reflect strong environmental, social, governance (ESG) convictions of both partners.

“Hines and Cadillac Fairview have seen the attractive long-term defensive nature of the asset class through their international portfolios. We have been strategically building a portfolio and are expecting to scale up the BTR portfolio in the short term, and the scale of the partnership shows a huge strategic commitment and belief in the opportunities which BTR presents,” Sam Bisla, managing director and head of living, Australia at Hines, commented on the new partnership.

“Hines has been investing in living assets across Asia for over 25 years, with recent acquisitions including co-living assets in Hong Kong and residential assets in Japan, most recently through its diversified investment fund, Hines Asia Property Partners (HAPP). Both Hines and Cadillac Fairview recognize Australian BTR as one of the most exciting growth opportunities in Asia,” Chiang Ling Ng, chief investment officer for Asia at Hines, concluded.

According to the MSCI Real Assets “Australian Capital Trends Report Q3 2022” Australian emerging BTR sector was ‘on a hot run’, with developers starting the construction of over 7,000 units since 2020 which confirmed that the sector was finally seeing momentum.

“Over half of the BTR developments that broke ground since 2020 are in metropolitan Melbourne, with construction of over 1,700 units starting this year alone. The largest project that began in 2022 is Greystar’s three-tower, 700-unit development in South Melbourne, slated for completion in late 2024,” the report read.

“The debate over whether the BTR sector will flourish in Australia has been vigorous for several years now. The number of units set to complete in 2022 is over 3,500, which would mark the strongest year for new openings and could be a turning point for the fledgling sector.”