This commercial property giant has a $4b housing plan
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Fund manager Charter Hall, best known for its extensive portfolio of offices towers, warehouses, malls and pubs, has outlined a bold plan to develop a $3.9 billion housing portfolio.
For managing director David Harrison, it makes perfect sense to tap Charter Hall’s extensive land bank of commercial real estate for “higher and better use” sites that can be turned into residential or mixed-use projects in a market where development has been significantly constrained.
“We’ve got quite a large captive portfolio potential residential project,” Harrison said while delivering the company’s 2025 financial result.
“As we have done for years, we add to our development pipeline uncommitted projects. We have secured planning approvals for a few different projects.”
Most of the projects are likely to end up as build-to-sell development, while some may involve apartments above shopping centres. Charter Hall could also look to add value to assets it already has, he said.
“If those residential approvals provide an opportunity for us to bring in capital partners that are prepared to fund major residential projects, that’s basically the way we’re going to exploit it.
“At all times we’re looking to add value to the assets that sit in the various funds. We’ve also got a pretty strong conviction around lack of supply. It’s no secret Australia’s in a housing crisis with a shortage of supply.
“Quite often, one of the reasons we have a competitive advantage is we have income-producing brownfields land that doesn’t eat its head off while you’re going through the planning process.”
Among the projects in Charter Hall’s residential “incubation portfolio” is 201 Elizabeth Street in the heart of Sydney, where it has approval for a $3 billion hotel and apartment project. At Westmead, where Charter Hall has been developing facilities for Western Sydney University, it has approval for a residential project as well.
Another project is in Brisbane, next to the Bowen Hills station and within walking distance of infrastructure that will be created for the 2032 Olympics.
“And there’s a whole range of other things that are not in that [$3.9 billion] number, that are not yet planning approved that will get planning approved progressively over the next 12 months,” Harrison said.
As extensive as it is, the housing portfolio forms just part of Charter Hall’s $17 billion development pipeline, which is dominated by its core business in commercial property, including office and industrial.
Delivering a bumper 7.3 per cent lift in operating earnings to $385 million for FY25, Harrison forecast even stronger growth in the year ahead as the property cycle turns in its favour.
After delivering operating earnings per share of 81.4¢ over the 2025 year, Charter Hall expects to deliver 90¢ this year, representing 10.6 per cent growth. Distributions rose 6 per cent to 47.8¢ over 2025 and Charter Hall expects similar growth this year.
Harrison described 2025 as “an inflection year” with stabilising asset values, falling interest rates and accelerating flow of equity into its array of managed funds. Charter Hall’s funds under management have risen past $84 billion.
That spells good news for the ASX-listed fund manager in the coming year as both wholesale and retail investors head back into real estate, in the hunt for yield. The platform brought on board 14 new wholesale funds over FY25 from Australia, Europe and Asia. Another 41 existing investors increased their investments.
“It almost always happens that the direct flows accelerate as interest rates fall,” Harrison said.
“If you look at the open-ended funds we’ve got in the direct business, if you invest in those, some of them are providing 8 per cent to 9 per cent distribution yields.”
