Homecorp Property Group has kicked off construction of its $200 million build-to-rent (BTR) project on the Gold Coast, buoyed by a solid levels of inquiry from tenants amid record low vacancy rates across the city.
The builder has secured big-four backing of the project with ANZ Bank (ASX: ANZ) announced as senior lender for the development - the Gold Coast's first dedicated build-to-rent project - which is also backed by financial services giant Morgan Stanley.
The development will comprise 446 new apartments over four towers on a prime 1.3ha site within the Gold Coast's education and technology precinct at Varsity Lakes adjacent to Bond University.
The dual-tower first stage of 257 apartments is expected to be ready to take its first tenants in early 2022 and is poised to capitalise on one of the tightest rental markets ever experienced on the Gold Coast.
The latest data from the Real Estate Institute of Queensland shows vacancies well below 1 per cent across the city, with some as low as 0.2 per cent. Varsity Lakes vacancies were sitting at 0.6 per cent in the December quarter, and a 10-year historical average of 1.43 per cent.
The low vacancy rates raised concerns by the Real Estate Institute of Queensland earlier this year that the shortage of rental accommodation was placing undue pressure on the state's housing sector.
Homecorp CEO Ron Bakir says while inquiries have been strong, the BTR development is considered to be a strategic long-term asset by the company. All available apartments in the project will be offered as permanent rentals to the market under the BTR model.
"While market conditions are currently primed for a new development such as this, BTR remains an asset class in its own right that requires a long-term view," says Bakir.
"This is a development that will stand the test of time, so we're building for the future while being mindful of the demand for rental accommodation being experienced on the Gold Coast at present."
ANZ says its backing of the project is driven by the bank's efforts to seek innovative solutions to boost housing stock.
"Supporting the build-to-rent model is one way to ensure good quality housing is available," says Jeff David, executive director of property, institutional, at ANZ.
"The location, design of the apartments and overall amenities are important attributes, which have been taken into consideration throughout the planning process of this project."
The development, located on a ridgetop site bounded by University Drive, Main Street and Capital Court, offers views across Varsity Lakes extending to the ocean and Hinterland.
It has been designed to create a village atmosphere with an extensive range of lifestyle amenities provided for residents, including a café, an expansive outdoor swimming pool area, a large gymnasium, a dog play area, games room, a cinema and rooftop terrace.
"We have taken the same design approach to this development as we would when creating new residential spaces for owner-occupiers," says Bakir.
"Our plan is to deliver desirable living spaces that appeal to residents who will want to remain in place over many years."
Under the BTR model, tenants will be able to secure a longer-term residential lease than is typically available from smaller private landlords. The model has been widely adopted in the UK and US, with many large fund managers accepting it as a valued asset class.
Homecorp is a Gold Coast-based company with almost two decades of residential development experience. The company has delivered more than $1.5 billion in projects Australia-wide.
Homecorp's construction arm, which was established by Mr Bakir in 2014, is majority-owned by Japanese industrial giant Toyota.Never miss a news update, subscribe here. Follow us on LinkedIn, Instagram and Twitter.
Business News Australia
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support