The principals of Scape Australia, Stephen Gaitanos and Craig Carracher, have formed an A$1.5 billion ($980 million) partnership with Dutch fund managers APG and Bouwinvest to develop and acquire assets in the emerging build-to-rent sector Down Under.
The fresh joint venture of the longtime partners will focus on developing urban, transport-oriented rent-to-live assets and operate under a new brand, giving capital partners access to branded, low-risk, resilient cash flow, Scape said Monday in a release.
The JV plans to develop a portfolio of multi-family assets in Australian capital cities, at first focusing on Sydney, Melbourne and Brisbane. The initial target is to deliver a minimum of 10,000 rent-to-live apartments by 2030.
“We are excited to have high-calibre global investors APG and Bouwinvest partner with us again in the BTR sector, for our rent-to-live JV, following the successful journey we have been on for purpose-built student housing over the past 10 years,” Scape Australia co-founder Gaitanos said. “This comes at a very exciting time with our current portfolio at full occupancy and a clear need for more well designed and located rental accommodation in Australia.”
Affordable Rental Options
The new venture aims to create more affordable options for renters in Australia. The timing coincides with the government’s recent announcement to launch incentives encouraging investment in the BTR sector, such as halving the withholding tax rate imposed on foreign investors in managed investment trusts to 15 percent from 1 July 2024.
Gaitanos and Carracher founded Scape Australia in 2014 and built the platform into the largest residential-for-rent owner and operator in the country, managing more than 33 operational assets (16,300 apartments), with 12 purpose-built student housing and urban living assets under development (10,000 apartments).
APG and Bouwinvest were early investors in Scape, committing A$150 million to the developer’s first Australia joint venture in 2016. Other global partners have included Canada’s Ivanhoe Cambridge, which committed A$1 billion to Scape Core Program, a student housing fund also backed by APG, Bouwinvest and European asset managers Allianz and AXA.
“The rented residential sector is an important constituent of the global portfolio we manage for our pension fund clients,” said Graeme Torre, APG’s head of Asia Pacific real estate. “It is fully aligned with one of the building blocks of our real estate strategy — urbanisation, where amongst other things, we look to address important issues such as housing affordability.”
The latest partnership has the capacity to accept other institutional investors, for which a further equity raise is planned.
Priced Out of Ownership
Average house prices in Australia are down from their peak in April 2022, but the country’s large cities continue to have some of the priciest homes globally.
Sydney’s housing market was named the second least affordable in the world after Hong Kong, with Melbourne, Adelaide and Brisbane ranking ninth, 14th and 15th, respectively, in the Demographia International Housing Affordability report published earlier this year.
High housing prices have caused a shift in views of home ownership, Scape’s Gaitanos told MTD TV during the Mingtiandi APAC Residential Forum in March.
“There is a huge affordability crisis here at the moment and unfortunately, or fortunately, everyone wants to live within 5 to 10 kilometres of our major CBDs,” Gaitanos said then. “Buying your own house maybe was a dream that your parents had, but it’s becoming near impossible. For us, it’s just a natural evolution.”