PGIM adds rental housing assets in Shanghai, Sydney and Brisbane

PGIM Real Estate has added to its rental residential portfolio in the Asia Pacific region, with the US investment manager securing deals with local partners to acquire properties in Shanghai, Sydney and Brisbane.

In China’s commercial capital, PGIM led a joint venture to purchase a residential building within the Baoshan Power Lounge City Complex in Shanghai from Hong Kong-listed Power Lounge. Company representatives confirmed to Mingtiandi that the company’s operating partner in the acquisition is Chengjia (or CJIA), the apartment operator of mainland hospitality giant H World Group, formerly known as Huazhu Hotels Group.

In Australia, PGIM has joined fund manager Point Capital in a residential rental programming joint venture with a project in Sydney’s Parramatta precinct and one in Brisbane’s Fortitude Valley. Each is planned to include 300 apartments for rent on a smaller scale.

Changing demographic trends and deteriorating affordability of home ownership are driving demand for rental housing in major cities, said Bennett Theseira, head of Asia Pacific at PGIM Real Estate.

“The Asia-Pacific living sector is significantly undersupplied, offering strong growth potential for investors,” Theseira said. “The institutional housing market, which offers high-quality, professionally managed housing units, is at a nascent stage in the region outside of Japan.”

Race to supply beds

PGIM, a subsidiary of US finance giant Prudential, has made the latest acquisitions on behalf of value-add, core and additional core strategies in the Asia-Pacific region.

Bennett Theseira, Head of PGIM Real Estate Asia Pacific

The 19-storey purpose-built residential building in Baoshan Powerlong City houses more than 500 apartments and offers common areas and facilities, including a gymnasium and a lounge, PGIM said. This property is part of a commercial center comprising a shopping centre, office buildings and hotels, and is intended to cater to the long-stay needs of young professionals.

The Australian assets, located at 458 Wickham Street in Brisbane and 7 Macquarie Street in Sydney, were selected based on their status as major employment, residential and leisure centers located close to public transport.

The joint venture with Point Capital, the company behind the Tribe hotel chain, aims to develop two or three more projects of similar size with an initial target of 1,250 to 1,500 beds upon completion. The special modular construction method that has been used at Tribe will be adopted for the delivery of the project’s rental housing projects.

“Our joint venture with Point Capital represents a very exciting opportunity as it will provide much-needed rental inventory to Australia’s significantly under-supplied residential rental market,” said Steve Pollock, Australia Head of PGIM Real Estate.

Follow-up on Hong Kong

These deals in Shanghai and Australia follow PGIM’s acquisition of two hotels in Hong Kong last year and converting them into modern co-living apartments this year.

Weave Studios Kowloon West, a joint venture with local developer Weave Living, has been transformed into 435 fully furnished studio apartments across 29 floors. Located near Olympic MTR station, the property previously opened as Rosedale Hotel in May and offers 15,000 sq ft of open space with shared amenities.

Dash Living on Hollywood, a 22-story former Travelodge building on Hollywood Way in downtown, is being converted into a co-living facility with 148 rooms and community amenities for tenants.

“Despite the challenging market conditions, we believe the rental housing sector will benefit from favorable demographics and strong growth in rental demand,” Theseira said. “We expect the sector to provide the sustainable income and return that investors are looking for in a volatile inflationary environment.”