The build-to-rent apartment revolution sweeping Australia is picking up more domestic backers with developer Cedar Pacific winning the support of local company Australian Ethical for a major tower in Brisbane.

The group has joined a club of offshore investors in backing a landmark 475 unit project, with the move signalling that local players are more willing to support the sector.

The new style of apartments directed solely at renters are taking off across Australia, with Melbourne the initial focus of the industry. But it has also expanded to include sites in Brisbane and Sydney.

Big local players, including Mirvac and Lendlease have also been active, alongside a series of private developers as well as offshore giants.

Local institutions are now looking to the sector which was initially propelled by offshore capital.

Cedar Pacific said that Australian Ethical had come into the final close for its build-to-rent project in Brisbane via a partnership in what was its first deal with a domestic investor.

Cedar Pacific is committed to attracting more investors from Australasia and the deal indicates the sector is maturing.

The Quay Street project will devote over 50 per cent of unit to providing affordable housing for eligible residents.

Artist’s impression of Cedar Pacific’s Quay Street project in Brisbane.

The project brings together Australian Ethical, Grosvenor’s Diversified Property Investments, Moata Ventures and Sumitomo Forestry Australia.

Cedar Pacific chief investment officer David Hill noted the alignment of its environmental and social values with Australian Ethical, which also called out the project’s contribution to housing supply.

“It has been hard to attract domestic super money into Australian BTR projects,” he said. However, he added there was now “pressure about being seen to help address the housing crisis”.

Mr de Medici said that the company was also seeing good returns in build-to-rent relative to other asset classes in real estate. The city fringe project will seek to attract key workers and it is near major healthcare facilities.

Brisbane is attracting more build-to-rent capital with other projects also on the way. Notably, US investment giant Hines has teamed up with Canadian pension fund Ontario Teachers’ Pension Plan to buy two build-to-rent apartment blocks in Brisbane for about $350m.

Australian Ethical said the Cedar Pacific project was in keeping with its values.

“We’re pleased to be partnering with Cedar Pacific on a premium project that will supply affordable housing, and which delivers a strong value proposition,” Australian Ethical head of private markets Adam Roberts said.

He said that the Australian Ethical Multi Asset funds had invested in the Queensland government’s build-to-rent pilot project being developed by Cedar Pacific.

“We see a material under-supply of new housing starts compared to forecast population growth, constrained partly due to the high number of other major construction projects underway across the region. Alongside a number of other institutional capital partners, we have committed about 15 per cent of the required capital to develop the project,” he said.

“Over the past few years, we have evolved our strategy and team to focus more on semi-direct or co-investment opportunities, that allow us to create a thoughtful portfolio of exposures that deliver attractive market-rate returns but also deliver a net-positive outcome to the community,” he said.

Credits: February 26, 2025 – The Australian Business Network
Author: Ben Wilmot