Deutsche Asset Management is acquiring a build-to-rent tower in Liverpool.
Deutsche Asset Management, formerly DWS Group, has forged into the local build-to-rent market with the acquisition of a major tower in the western Sydney suburb of Liverpool.
The move comes as build-to-rent is being hailed as more viable for residential developers, as traditional build-to-sell towers have been hit by rising interest rates, federal budget property tax changes and the Bathla collapse.
The global funds manager has struck a deal with private residential developer FYVE and construction contractor Binah, and will acquire and develop the block on Elizabeth Street in Liverpool.
The move puts it among the large US and local groups that have set the pace in building rental towers in Sydney and Melbourne, with the “living sector” attractive to investors as office buildings struggle in the suburbs.
The project, which will be Liverpool’s first major housing project in almost a decade, will transform the site into a 34-storey development and the suburb’s tallest tower. It will consist of about 414 residential apartments and sport a gym and rooftop facilities.
The parties did not disclose a value but the site was pitched as a $200m project by Fyve during the pandemic when it had just 193 apartments and a 93-room hotel and associated commercial space.
The acquisition, on behalf of one of DAM’s real estate funds, is subject to planning approval expected in 2027. The move is in keeping with its essential living strategy, where it is aiming to build up rental units for medium-income households across western Sydney, as well as suburban Brisbane and Melbourne.
The tower sits in the heart of Liverpool CBD and is well placed to serve the growing essential-worker catchment in one of Sydney’s major economic and population growth corridors.
The block is also close to a major shopping centre, one of the state’s largest hospitals, technical college and university campuses, as well as Liverpool train station.
It will also benefit from the employment and economic activity generated by the new Western Sydney International Airport and planned city-shaping infrastructure investment under the NSW government’s ‘Three City Strategy’.
Deutsche Asset Management head of real estate for Australia, Ben Taylor, said the transaction aligned with the firm’s build-to-rent strategy to target the under-supplied mid-market segment, focused on market rental accommodation for key workers who support the region, at relatively affordable rental levels.
Other players have struck deals in Sydney’s suburbs. Novus secured a Japanese investment consortium to support a $350m project in Epping in Sydney’s northwest and Mirvac is raising capital as it brings build-to-rent to inner-city Green Square.