MA Moelis, Citi and Jarden point to new models of medium and high density living is where investors want to be in 2024, as traditional residential developers reduce their emphasis on traditional house and land greenfield developments.
2023 saw one of the most active years by the big players shuffling their residential development strategies.
When it was thought that land lease has settled down with approximately eight maturing developers, new money and new entrants with significant war chests of cash have busted into the market.
Last year saw Australia's most successful private equity firm, Pacific Equity Partners, and Mirvac buy Singapore’s GIC's 95% stake in land lease operator Serenitas, with the deal's completion due in the first quarter of this year.
In December, Stockland and Bangkok-listed Supalai agreed to buy 12 of Lendlease's master planned communities, with the new partnership then naming nine of the communities to now include bed land lease lots.
This all follows Japan’s Mitsubishi Estate Asia jumping in with Stockland as joint partner in this land lease developments 12 months earlier.
In the quiet world of rental villages, last year ASX listed Eureka paid $44 million for 321 occupied units after buying the Ingenia Gardens’ rental villages in Perth, Mandurah, Bunbury, and Albany with $28.5 million for a new Eureka-managed wholesale property fund called Eureka Villages WA Fund.
No firm Gilbert + Tobin reports that 27,471 build to rent apartments are in the pipeline after less than five years in the market, with $2 billion a year rolling into the sector and expected to continue at that rate until at least 2030. By then it will be bigger than student housing.
Ben Boyd, MA Moelis Australia Managing Director and Head of Real Estate, told the Financial Review investors will focus on self-storage, land lease communities, data centres and living, including Build To Rent and co-living.
Ben Connolly, Citi, Australia & New Zealand Managing Director and Head of Real Estate, said the data centre sector and the various residential sub-sectors, including manufactured housing, seniors living, student accommodation and Build To Sell/Rent, display characteristics of robust growth outlooks and are likely to be preferred sectors for investors in 2024.
Mitchell Schauer, Managing Director, Head of Real Estate investment banking, Jarden, nominates two categories: firstly, residential living, including residential-for-rent like multifamily, land lease, and hotels, and traditional residential-for-sale.
Reflecting what has happened with land lease community investments from overseas, he says Australia does have a housing affordability and supply issue, and facilitating institutional investment in size can help to move the dial.
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