Salta to divest Melbourne riverside site to focus on Docklands build-to-rent project
Salta Properties, owned by BRW Rich Listers the Tarascio family, is looking to divest from a Melbourne Riverside development site to focus on developing one of Australia’s first build-to-rent projects.
The developer’s project pipeline of $5.6 billion includes a waterfront development in Docklands, which will comprise more than 200 apartments above a five star hotel.
A feature of the 699 La Trobe St project would be that the apartments will not be sold, but offered as long-term multi-family leases.
Meanwhile, it is planning to sell the Riverside site.
The more than two hectare Yarra waterfront site has a permit for 494 apartments and could fetch $75 million or more.
But Tarascio wants to focus on the Docklands project.
"A lot of our focus is on projects we can retain for the long-term now," Tarascio told The Australian Financial Review.
"We've got the Docklands coming up which is one we want to hold on to.
"We have to work and manage our resources as best as possible. We do have to release some equity in some sites."
Under the build-to-rent model, a developer takes returns by holding onto developed residential accommodation for rent, rather than taking profit through sales.
The conditions for that asset class are improving as commercial yields tighten, making residential rental yields more attractive by comparison and factoring in risk, the AFR said.
At the same time, tighter lending to investors and higher taxes on foreign buyers are likely to reduce the rental stock in spite of housing demand, helped by immigration, remaining strong, according to Tarascio.
As a pioneering asset class build-to-rent projects are likely to be more capital-intensive while lenders adjust to the concept.
"We probably need to put a bit more equity in up front when we are doing the first," Tarascio said.
Knight Frank's Paul Henley, George Burbury, Stephen Kelly and Tom Zhou are appointed to the Richmond site on River Boulevard and Christine Crescent.
Henley said the five-tower Richmond project, designed by Buchan, could be developed in stages and would appeal to local and regional players "who want to know they have viable product".