
Mirvac recently unveiled its new build-to-rent venture, valued at $1.8 billion, alongside a cornerstone investment from the Clean Energy Finance Corporation (CEFC), who tipped in $75 million.
Each new project in the venture is targeting a minimum average of 7.5 star NATHERS rating and net zero carbon emissions in operations.
The CEFC’s involvement in sustainable apartments is not new, as the government-owned green bank has previously invested $80 million in Mulpha Australia’s Norwest Quarter.
This development is set to feature 196 net zero-ready apartments, designed to consume 50 per cent less electricity from the grid. These apartments will be powered entirely by renewable energy, boasting an all-electric and gas-free design.
In 2020, the CEFC also provided support to the Qualitas low emissions and energy-efficient build-to-rent debt fund with a significant investment of $125 million.
The partnership between Mirvac and the CEFC dates to 2017 when they collaborated to incorporate solar photovoltaic (PV) and battery solutions into the base price of houses within Mirvac’s estates, without any additional cost to consumers.
This collaboration further expanded with the CEFC’s initial investment in the Mirvac Sydney Liv Indigo build-to-rent project, which marked Australia’s first institutional build-to-rent platform.
Michael Di Russo, the Head of Property-Investment at CEFC, emphasised the immense sustainability potential offered by apartments, particularly within the context of build-to-rent projects.
“Apartments offer an excellent opportunity for improved sustainability with shared services that also have the potential to prolong building life,” he said.
“Our property-related investments are focussed on delivering ‘demonstration’ value for the market on what can be commercially achieved through projects and then use the learnings to leverage these insights across the broader market to enable accelerated change to occur.
“With residential buildings responsible for about 24 per cent of Australia’s overall electricity use, the opportunity is large and by implementing sustainable solutions at the design stage, developers, builders and owners can really make a substantial difference to the carbon footprint of their homes.
“There is growing momentum behind the build-to-rent sector bringing with it institutional capital and the learnings from commercial real estate to apply into a similar longer-term approach to asset ownership in residential. This presents an enormous opportunity to lift the energy performance of Australian rental properties by embedding sustainability features at the project feasibility stage.”
Mr Di Russo said unlike the general commercial property market, ownership in the residential sector is highly fragmented.
“By working with parties like Mulpha, Qualitas and Mirvac who have strong sustainability ambitions we can demonstrate how market leading sustainability outcomes can be achieved alongside commercial returns,” he said.
Mr Di Russo said the focus from CEFC on leveraging private capital to get behind sustainability features from the beginning is a cost-effective way to positively impact decarbonisation in the sector.
“By working alongside consultants, contractors, financiers and sponsors to deliver market leading projects, the lessons naturally flow into each party’s subsequent projects,” he said.
“These practical insights also enhances our work with industry groups such as the PCA, GBCA, NABERS and others, to progress rating tools and industry understanding. The residential sector accounts for approximately 12.5 percent of Australia’s total carbon footprint and according to the Australian Bureau of Statistics, represented $60 billion of construction expenditure in the 2021-22 financial year.”
The CEFC will also administer the $1 billion Household Energy Upgrade Fund (HEUF) announced in the most recent Federal Budget.
Mr Di Russo said they are expecting a high take up of the allocation as households increasingly look to capture the benefits of sustainability.
“We expect to make HEUF-related investments with co-financiers in the 2023-24 year, with the consumer finance available shortly thereafter. We will provide more information as the program develops,” he said.
Mr Di Russo said energy efficient in the property industry is a ‘no brainer’.
“[It is] an area where participants right across the property sector can show leadership and deliver long term sustainability benefits,” he said.