M&G Real Estate – part of M&G plc’s £72bn private assets and alternatives division – is making its first foray into Australia’s Build to Rent market via a develop-to-core partnership with Novus, a developer, owner and operator of Build to Rent assets. On behalf of its Asia Property Fund, M&G will commit A$450m – representing a 95% stake in the partnership – to develop a portfolio of Build to Rent properties in some of Australia’s key cities.
M&G’s investment will provide capital for the Novus Build to Rent Trust (NBT), seeded with a 173-home residential scheme – Novus on Sturt – in Melbourne’s Arts Precinct. The project is targeting a 7-star NatHERS rating and will be an all-electric building, powered by renewable generated green power. It will also exceed National Construction Code (NCC) energy efficiency requirements. Environmental features will include solar PV panels, energy efficient appliances, rainwater capture and on-site reuse and integrated smart monitoring systems.
“As a local specialist, we have a clear vision and value proposition for Build to Rent in Australia and are proud to partner with M&G Real Estate – an experienced global investor in the sector.”
Adam Hirst, CEO & Managing Director of Novus
Beyond the seed asset, NBT will focus on developing a portfolio of Build to Rent assets focused on Australian capital cities, with an initial focus on Sydney and Melbourne. Australia’s Build to Rent sector is poised to mature over the medium to long term due to lifestyle changes, rising home prices and demand for high quality, purpose-built homes with service-focused property managers. The country’s strong population growth over the past 15 years is set to continue, which in addition to a structural undersupply of apartments, strong rental demand and affordability constraints present a compelling opportunity for long-term investors.
“Having undertaken an extensive process, we are pleased to have finalised an agreement with M&G Real Estate, a highly regarded global investor, to create and manage a high-quality, Australian Build to Rent portfolio. Together, we are well positioned to execute our compelling pipeline of opportunities, adding to an excellent seed asset already in place.”
David Southon, Executive Chairman, Novus and Aliro Group
This latest commitment from the M&G Asia Property Fund follows its recent US$424m acquisition of a 30-asset residential Build to Rent portfolio in Japan. The Fund’s continued conviction in Build to Rent now takes its total commitment to Build to Rent in the region to US$1.28bn.
“Having been active in the Build to Rent market in Japan for many years, we are very pleased to be working with a partner of Novus’ calibre in Australia, where we already have significant exposure to other sectors. We look forward to building our capability and providing our investors with access to the resilient income stream that Australia’s residential real estate market offers.”
Richard van den Berg, Manager, M&G Asia Property Fund
