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Melbourne-based built-to-rent platform Local Residential has closed its first inaugural managed venture with an offshore pension fund for developments totalling $650 million as the property group scales up its plans to have 5,000 apartments either under way or developed in the Australian market by 2026.
The debut managed venture, Local: Residential Turnkey Venture I, has fully deployed the funds for the development of two Melbourne projects - a 406-unit project in South Melbourne and a 425-unit project in Box Hill – both of which have a minimum 10 per cent commitment to impact housing.
The two projects will add to Local Residential’s first development – a 477-unit project at Kensington in Melbourne’s inner north-west – which is set for completion in the second half of this year.
The closing of the $650 million managed venture takes Local’s total completed assets under management to more than $1.1 billion comprising more than 1,300 apartments, or more than a quarter of its 2026 target.
Founded in 2021 by property industry veterans Dan McLennan and Matt Berg in conjunction with a fund managed by Macquarie Asset Management Real Estate, Local has grown to become one of the largest specialist build-to-rent platforms in Australia.
McLennan, who along with Berg is joint CEO of Local, says the rise of the build-to-rent model has been aided by the ‘faltering residential pre-sale’ model which has led residential developers to seek out alternatives to deliver their projects.
“Local seeks to partner with developers to unlock their sites via build-to-rent, providing them with a fixed take-out price on completion, while leveraging Local’s design, development and property management expertise at each stage of the process,” says McLennan.
“For our investors, this means we are taking on reduced development risk and delivering a bespoke build-to-rent project within two years versus three to four years in a traditional development model.
“The model we’re pursuing is suited to current economic conditions as our competitors have struggled against economic headwinds.”
Local has revealed it has a strong pipeline of development opportunities in Melbourne, Sydney and Brisbane, with plans under way to work with capital partners to deliver projects in these key markets.
Berg forecasts another big year ahead for Local as more investors ‘tap these turnkey opportunities’ adding that the company is currently undertaking due diligence with investors to establish other managed ventures to drive its growth plans.
“In addition, we are exploring opportunities to deliver affordable housing, where we believe there is a significant opportunity to deliver tangible social benefits without government subsidies,’’ says Berg.
The Kensington project, located on the corner of Macaulay Road and Stubbs Street, comprises six buildings that will deliver 477 apartments and a range of residents’ amenities including a heated pool, coworking offices, private dining spaces, wellness areas and a big screen room, with dog friendly outdoor spaces and green spaces. Some 42 apartments with this project have been dedicated to impact housing.
Local says the market response to the project, which is expected to welcome its first residents in August, has been 'fantastic'.
"There is a shortage of apartment stock in the area, and with it being so well connected to transport and lifestyle amenities, we anticipate a strong uptake of the apartments," says the company.
The Box Hill development, located at 517-521 Station Street, comprises 425 apartments across two towers that are connected by a common podium.
The towers will sit atop SKY SQR, a new food, beverage, lifestyle and retail precinct by Jeff Xu’s Golden Age Group, the company behind Melbourne restaurants Hu Tong Dumpling Bar and Mr. Bo and the Ocean 12 karaoke bar at Crown Casino.
Local acquired the development from Golden Age Group in October last year.
Meanwhile, the South Melbourne project, located at 245 Normanby Road, will comprise a 40-level tower with 406 apartments and shared spaces such as a pool, exercise studios, private dining rooms, a cinema, residents’ lounge, coworking spaces, pet wash bays and even a golf simulator room.
The Box Hill and South Melbourne projects are expected to be completed by late-2025. Construction of the South Melbourne development is under way following demolition of the previous building on the site in late 2022, while work at Box Hill began in February last year.
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