1 August 2022

Buyer sought for 435-unit Gateway build-to-rent project in Dickson

| Ian Bushnell
Join the conversation
35
Build-to-rent site in Dickson

The build-to-rent site at 496 Northbourne Avenue in Dickson. Photo: CBRE Canberra.

The owners of a prime Northbourne Avenue corner site in Dickson are seeking a buyer/investor for a massive build-to-rent project that would add a further 435 units to the inner north.

The 6250 square metre Gateway site on the corner with Antill Street is currently occupied by an office building, but the government tenant vacates in November, opening the way for a four-building development proposal.

It would have 20,000 sqm of floor space, including 1900 sqm of retail/commercial space, 3000 to 4000 sqm for residential amenities and basement parking for 470 cars.

The CBRE Canberra listing says the site in the Dickson Group Centre is only 4 km from the CBD, is a focal point of significant urban renewal and is at the gateway to the Northbourne Avenue light rail corridor.

“It provides an opportunity for owner operators to purchase a turn-key development or investors to secure a prized asset with a pre-committed long-term management agreement in place with one of Australia’s leading operators,” the listing says.

READ ALSO Buyer or investor sought for Braddon student housing project

CBRE Canberra’s Tristan Cotchett said the site owners, well-known Canberra developers John Russell and Wayne Gregory, had been considering the project for several years, but the lease expiry and the current rental environment in Canberra had aligned to take the proposal forward.

“They’re really just leveraging the strong fundamentals of Canberra as a residential market with obviously next to no vacancies and the highest apartment rents in the country,” Mr Cotchett said.

“They feel now’s the time. We’ve had quite a few institutional groups who have expressed strong interest in the property. We’ll be looking to get one of the groups in an exclusive dealing period to negotiate a takeout structure on the 435 units, which will be in excess of the end value of $200 million-plus.”

Sketch of four buildings

An early sketch of the build-to-rent proposal. Image: Supplied.

Mr Cotchett said build to rent would be a growing space in Canberra and the national capital was now on the third tier of investor interest after Sydney and Melbourne, but those strong fundamentals and the comparatively cheaper land were swinging them to the ACT.

“Land costs are right, we’ve got a transient population and we’ve got strong apartment rents, and it’s been strong fundamentals for seven to 10 years now. It’s not like just sort of peak for the short term,” he said.

Canberra’s housing shortage was well known, with contributing factors being the ACT Government’s slow land release program and the uncertainties in the construction sector, Mr Cotchett said.

The government is also supporting build-to-rent ventures to get more housing built, and late last year it announced a market sounding through the Suburban Land Agency to test interest from the private sector and community housing bodies.

Mr Cotchett said it was hoped there could be an exchange by November, with a development application lodged soon after for Mr Russell and Mr Gregory to develop the site on behalf of the third party, who would not settle until the project was completed, likely to be in the first quarter of 2026.

The expected return would be a net yield of 4 to 4.5 per cent, based on Canberra’s stand-out performance of the past five years, and higher than Sydney or Melbourne’s 3 to 3.75 per cent.

READ ALSO Productivity Commission proposes new protections for Indigenous arts and crafts

The type of residential amenities to be provided would depend on the investor group, Mr Cotchett said.

“It’s best to have their own model on what they actually add … you’ve got several amenity options that people throw out there like dog walking, concierge, cinemas, all of that,” he said.

“That’s all available because we’re not going with a DA-approved site. It’s a scheme that people can rework.”

Expressions of interest close on Thursday, 28 July.

Join the conversation

35
All Comments
  • All Comments
  • Website Comments
Latest

Can we please stop this madness!!! Clearly this is overkill for this site, especially on this intersection entering Canberra. Please stop.

Join the conversation … if you can!

Soviet Block style housing for the plebs. Well known in Poland, Hungary, Romania, and Russia, etc. You can imagine these slums in advance.

Soviet Block style housing for the plebs. Well known in Poland, Hungary, Romania, and Russia, etc.

Housing expert Dr Cameron Murray has this to say about build to rent in his very aptly titled recent lecture: https://fresheconomicthinking.substack.com/p/why-politicians-must-pretend-to-want

Build to rent (BTR) is a “multi-billion-dollar giveaway to existing large property owners with no benefits to housing occupants”.

“On the Gold Coast is Australia’s first and largest BTR at the former 2018 Commonwealth Games Athlete’s Village. Despite record tight rental markets, this development of 1,251 dwellings was on a staged release strategy over 3 years. The manager of the project in 2021 told me they “didn’t want to flood the rental market”. Instead, they left hundreds of brand-new homes vacant for years to keep their rents up.”

“In Sydney at Mirvac’s Liv BTR project at Olympic Park, the rents are typically 10% to 30% above the local market rate. The rental prices there last year were $535 a week for a one-bed apartment, $615 for a two-bed, and over $1,000 for a three-bed apartment. To maximise their economic return, they focussed on the premium market with packaged gyms, facilities, appliances and services, to sell a more hotel-like experience.”

“This is what tax breaks on GST and land tax to encourage BTR landlords are going to deliver.”

Why is the ACT government facilitating the corporatism of the housing market when the lessons of the last 40 years are that a financialised, tax sheltered neoliberal approach to the housing market has reduced housing affordabilty and the living standards of younger Australians?

Mike of Canberra12:16 pm 27 Jul 22

Many years ago, I travelled to Washington and, as part of this, witnessed the ways in which planners and urban developers had developed the city and the manner in which the local government was housing its population. Suffice to say that, in Washington, there are large ghettos of poor people within specific areas, while the wealthy live either in luxury and high security in very upmarket, high-density Georgetown, or in more expansive properties in the adjoining states of Virginia and Maryland. Those working in but living outside Washington commute either by car on highly developed freeways or by high-speed rail.

What do we see in Canberra? The model appears to be one of densification and ugly high rise (such as in this story); a contrived land release program that is manipulated to purposely drive up land values at all levels in order to maximise rates revenue; growing numbers of people choosing to live in and commute to and from neighbouring rural centres such as Yass, Bredbo and Crookwell; and a large public housing population housed on some of the most expensive land in town. The decision we and our (very secretive) political masters must make is whether we wish to maintain the “garden city” model on which this city was founded many decades ago, or to go down the Washington route of working in and living outside the city in areas serviced by the transport infrastructure I have described. Our other conundrum is whether we continue to house non-contributing, welfare-dependent public housing tenants on some of the most expensive land in town or, in fact, disperse them around less expensive areas of the city, while managing them to achieve positive results. With geniuses such as Barr, Gentleman, Berry and Vassarotti in charge of this process, it’s hard to be optimistic.

HiddenDragon6:54 pm 26 Jul 22

Good to see the continued roll-out on Northbourne of planning and development which looks like something from a sterile ceremonial boulevard in a second-string Iron Curtain city in the 70s – very apt for a one party state where imported second-hand dogma is worshipped as the latest thing.

All that needs to be added is some Trabis (converted to electric, of course), puttering along near the trams, and the picture would be perfect.

Linda Seaniger5:58 pm 26 Jul 22

The proposed designed so looks like the old Redfern Housing Commisson flats in Sydney. As a gateway site into Canberra we deserve better. Eject the design and try again.

Incidental Tourist3:49 pm 26 Jul 22

20,000 sqm less 1,900 sqm commercial space and less some 3,500 sqm public amenities leaves 14,600 sqm per 435 apartments. So they appear to be mostly small studios of 33.5 sqm on average rather than spacious apartments many people would want to live in.

Also banks don’t like lending on apartments under 50 sqm. And buyers don’t like buying tiny serviced apartments especially if they can’t get a mortgage. Well, if the liquidity is limited, then I doubt if any institutional investor will be interested in 4.5% yield. They would expect close to 10% profit – similar to hotels. As govt wants renting it out cheap (not at a serviced apartment rate) there is no surprise that the build to rent idea is hardly picking up from the ground after so many years, fanfares, smoke and mirrors.

Lowest rent is proven to be offered only by small investors who operate on 3-4% yield. Indeed “mum and dad” investors have been supplying most of rentals for generations. So why keep wrecking main rental supply through excessive land tax and hostile tenancy act changes? The rents in ACT are highest in Australia and they keep going up under the current ACT housing strategy. Should the ACT govt stick with it expecting different result? Anywhere you look interstate where the land tax is lower and the tenancy act is more relaxed, the rents are lower too. Is it not a disgrace that even many working people can’t afford rental anymore under current housing policy settings?

Instead small investors should be attracted back to ACT. Land tax has to be reduced to pre-2012 level and the ACT tenancy act has to be relaxed back to what it was. In return the supply to the rental market will increase, vacancy rates improve and the rents will stabilise. If we have more affordable rentals, ACT Govt can focus only on assisting high priority needy tenants saving costs too. This is a real win-win solution and I hope there is still common sense out there.

There’s a huge opportunity for private equity who can build for-purpose rentals and offer better long-term leasing conditions on a more ‘European’ basis. It will definitely hollow out the individual landlord market and thats a good thing overall.

that is a good spot for something like this hopefully they build something nice. At least with a build to rent you also know all the units will be rented out none will just sit there as an investment with nobody living there

Daily Digest

Want the best Canberra news delivered daily? Every day we package the most popular Riotact stories and send them straight to your inbox. Sign-up now for trusted local news that will never be behind a paywall.

By submitting your email address you are agreeing to Region Group's terms and conditions and privacy policy.