MPG’S FORMULA POPULAR WITH TOWER TENANTS

19 Jun 2020

Quentin Tod – Gold Coast Bulletin

A drop in market confidence, rising unemployment and prohibitive housing prices means the build-to-rent model is proving successful for Morris Property Group 

BARRY Morris, the Gold Coast’s major high-rise developer over the past decade, is on the high road to success in a new field – build to rent towers.

The head of the Morris Property Group set out to lease his latest building, Oceans at Mermaid Beach, to tenants as the COVID-19 pandemic hit.

He has leased 48 of the 70 apartments in what is his debut build-to -rent venture, despite what he describes as “three months of turmoil for the property industry”.

The developer is, subject to the rental demand continuing, considering a second build-to-rent project – this one in Surfers Paradise with 80 apartments.

He said he also was contemplating taking MPG’s formula to Brisbane.

The group has achieved rents that start at $610 a week for its apartments at Oceans, which is in Ocean St on the eastern side of the Gold Coast Hwy.

The build-to-rent industry has become highly popular in the US and UK and major Australian developers have entered the field in tandem with financial institutional partners.

Gold Coast developer Ron Bakir is teaming with US asset manager Morgan Stanley as a funding partner on the first of four build-to-rent towers he is undertaking at Varsity Lakes.

Mr Morris said the impact of COVID-19 on market confidence, rising unemployment and prohibitive prices for housing in prime locations meant the build-to-rent model was coming into its own in Australia.

He said MPG’s strategy was to position developments in highly sought after locations near leisure and lifestyle facilities, workplaces and excellent transport links.

“Tenants have the opportunity to live in locations that might otherwise be out of reach if they wanted to buy, or because there is little rental stock available in prestige areas.

“Build-to-rent cuts out the property manager or landlord, and tenants can be confident they won’t have to move out if the landlord decides they want to sell or move in. ”

Mr Morris said the success of build-to-rent was linked to population, rental demand, land cost and interest rates. The fact there had been little new rental stock in Mermaid Beach for almost three decades made it a good choice for his company’s first project in the asset class. The developer said that while the Gold Coast had significant rental choice, there was little long-term certainty for tenants.

“Gold Coast apartments flip flop from short-term holiday rentals to long term and back as the seasons change. This provides a lot of risk for people looking for accommodation. ”