Mirvac transforms Queen Victoria Market tower into build-to-rent

The project itself is already well known, a high-rise apartment development approved on a block of land across the street from the popular market which the city council took control of as it pursued an ambitious regeneration of the precinct.

Local private developer PDG was brought in by the town hall in a development deal for the land, known as the Munro site, and has since gained approval for a project comprising two towers of 38 storeys and 10 storeys.

With work already under way on the project, Mirvac has invested into it after signalling last week that build-to-rent projects in Sydney and Melbourne would play a significant role in a $6 billion pipeline of opportunity.

“Build-to-rent is one of the largest real estate asset classes in the world and entering into this asset class makes good business sense for Mirvac,” Ms Lloyd-Hurwitz said on Monday.

“It will deliver a secure and valuable revenue stream, as well as presenting us with a new and growing customer base. We are excited to drive the establishment of the build-to-rent sector in Australia, for which we see enormous potential over time.”

Colliers International’s Oliver Hay and John Marasco helped to broker the deal.

PDG will develop the build-to-rent project as part of the final stage of the precinct, starting later this year, as well as a hotel and retail. The first stage, under construction, includes a community hub, public parking, affordable housing and childcare.

“This flagship project will contribute to the activation of this vital precinct and greater choice for Melbourne residents,” said PDG’s managing director Vince Giuliano.

Mirvac’s $750 million placement was raised to fund a range of existing and potential developments in commercial, industrial, residential and mixed-use projects, with an end value of $6 billion in total.

The Melbourne build-to-rent project is Mirvac’s second initiative in the nascent sector, with its first purpose-built effort within the Pavilions project at the Sydney Olympic Park due for completion next year.

Build-to-rent – or multifamily, institutionally-owned long-term rental apartments – is an emerging asset class which its proponents hope will help housing affordability.

The Sydney project is expected to generate an unlevered internal rate of return above 8 per cent. Around $145 million has been dedicated to the Homebush project so far.