Macquarie-Backed Local Residential Unveils $168M Melbourne Project

Local Residential, the Australian build-to-rent platform backed by Macquarie Asset Management, has announced an apartment project in central Melbourne with a completed value of A$270 million ($167.8 million).

The development in the inner suburb of Southbank, just south of the Yarra River and Melbourne’s central business district, will feature a 39-storey tower with 312 units, Local said in a release. The newest addition to the portfolio will boost Local’s asset pipeline to more than A$1.34 billion, according to the company.

Construction on the site at 65 Haig Street is scheduled to begin in the third quarter of this year, with completion targeted for late 2027. Local expects the project to attract increased investor attention after tax incentives for managed investment trusts went into effect earlier this year.

“This project will continue Local’s goal of delivering much needed housing, that improves rental landscape for Australians and spurs the kind of institutional Investment that the recent MIT legislative changes seeks to encourage,” said Chris Axsentieff, head of investments at Local.

No Cars Allowed

To help remedy Melbourne’s undersupplied rental market, 74 percent of the new project’s apartments are configured as studios and one-bedroom units tailored to singles and couples, Local said. There will be no car parking, enabling the developer to cut costs and align with “urban living preferences”.

The project promises 1,250 square metres (13,455 square feet) of tenant amenities, including co-working spaces, health and wellness facilities, an indoor heated pool, a sauna and steam rooms, a gym, a rooftop lounge, a private dining area and dedicated pet facilities.

“The addition of this core Melbourne asset to our portfolio responds to the significant undersupply of suitable housing across Melbourne, delivering right-sized housing in greater locations to renters who want quality housing and access to retail, transport, employment, shopping, and all that Melbourne has to offer,” Axsentieff said.

The latest milestone comes after Local reached a final closing of its inaugural fund in 2024 with investments in two Melbourne projects with an end value of A$650 million ($427.9 million).

The fully deployed fund, dubbed Local Residential Turnkey Venture I, invested in a 406-unit project in South Melbourne and a 425-unit development in the city’s eastern Box Hill suburb, with the vehicle receiving committed capital from a large North American pension fund.

Local, founded in 2021 by co-CEOs Dan McLennan and Matt Berg — both formerly of Melbourne-based developer Grocon — said last year that it had begun due diligence with investors on seed assets for a successor venture.

Easing Rent Growth

Most of Australia’s key housing markets recorded a slowdown in rent growth in 2024, led by Sydney and Melbourne, where the rolling annual trend eased from 9.9 and 11 percent respectively during 2023 to just 3 and 4.1 percent last year, according to CoreLogic.

The only capital cities seeing increased momentum in rent growth were Tasmania’s Hobart (6 percent) and national government seat Canberra (2.6 percent), following rent declines in those markets in 2023, the data provider said.

Sydney maintained its position as Australia’s most expensive rental capital, with a median weekly rent of A$773, per CoreLogic’s stats. Hobart kept its title as the county’s most affordable rental capital at A$554, followed by Melbourne’s A$604.