OSK Property is adding a rental residential element to its Melbourne Square mega-project by teaming up with a local apartment platform for an A$400 million ($262 million) apartment project according to an announcement this past week.
The real estate arm of conglomerate OSK Group has entered into a joint venture with the GQ BTR platform sponsored by Aussie luxury developer Gurner Group and investment manager Qualitas to develop and operate a 500-unit rental apartment tower south of Melbourne’s central business district.
Located within the A$2.8-billion Melbourne Square development in Southbank, the project is set to break ground in 2025 as part of a combined five hectare (12.4 acre) residential, commercial and hotel project being developed by a JV between OSK Property and the Malaysian Employees Provident Fund (EPF).
“It’s a project we’ve been watching for many years, and we are looking forward to contributing first-class rental accommodation to the precinct,” said Robert Clarke, chief development officer at Gurner. “We are excited to be able to provide an opportunity for further capital parties to join in on our platform’s growth as we continue to grow throughout Australia.”
Plugging Rental Housing Gap
OSK Property will maintain an undisclosed stake in the BTR project designed by Cox Architecture. The developers are also shooting for a 5 Star certification under Australia’s Green Star rating system for sustainable buildings and aim to eventually reach net-zero emissions with 100 percent renewable energy.
The project is the latest addition to GQ’s growing BTR portfolio since the platform was launched in 2021 with a three-project seed portfolio, including an A$350-million rental housing project at 334 City Road, which is located a few blocks from Melbourne Square.
“This joint venture with GQ represents the next evolution of our Australian pipeline, allowing us to go where the market is, recognising the under-supply of rental accommodation in Melbourne, while enhancing the offering at Melbourne Square and maximising the position of our existing portfolio,” OSK Property Australia chief executive officer Chong Boon Woon said.
Melbourne needs to build an average of 17,500 apartments each year over the next decade to plug the housing gap, either through BTR or build-for-sale projects, according to consultancy firm Charter Keck Kramer.
By May of this year GQ’s portfolio had grown to over 3,650 apartments with a combined value of A$3.5 billion, which was more than half of the venture’s proclaimed target of 5,000 units by 2025, Gurner founder, Tim Gurner, said in a Linkedin post at the time.
When the Melbourne Square development was launched in 2017, OSK Property and its pension fund backer envisioned building a total of four residential blocks, an office tower, a hotel and retail shops in a span of eight to ten years.
The first stage, which was completed in March, features a total of 1,043 apartments across two residential towers and approximately 6,000 square metres (64,580 square feet) of retail space. The initial phase, which the builder valued at A$490 million, also includes a 3,745 square metre public park, a Woolworths supermarket and childcare facilities.
The second phase involves development of the 591-unit BLVD residential tower with OSK and EPF having sold 40 percent of the units in the building since its soft launch in May.
BTR Gathers Steam
Gurner and Qualitas are looking to beef up their BTR portfolio to as many as 10,000 units by 2028 to meet rising demand for more rental homes Down Under.
“We believe we are coming to a period of undersupply that will be unprecedented and cause huge pressures on rents and also house prices and that is before the huge immigration that is coming our way,” Gurner said in the same social media post, adding that he sees rental residential playing an important role in filling that supply gap.
The pressures on housing affordability in Australia have attracted other investors from the Malay peninsula, in addition to OSK, as well as players from further afield.
In May, Singapore’s City Developments Ltd (CDL) marked its entry into Australia’s multi-family market as it unveiled plans to develop a pair of rental housing projects – a 240-unit apartment along Normanby Road in Southbank, and a 320-unit complex in Toowong, a suburb of Brisbane.
In November of last year, US developer Hines partnered with Canadian pension fund manager Cadillac Fairview to form a A$1.5 billion JV to develop, acquire and operate rental properties across the country.