Newest Land Lease Player Plots Sector Shake-Up

It may look like a blank slate, but this Flagstone site will soon be the flagship development of the land lease sector’s newest entrant, Millbray. And its plans could shake up the maturing industry. Macquarie Asset Management has unveiled its land lease debut with the establishment of the new vertically integrated company. The group broke ground on its first project at Flagstone near Logan City, between Brisbane and the Gold Coast, this week with a $1.7-billion, 2000-home pipeline already secured, and a vision for 5000 homes on the eastern seaboard. The industry, which is reportedly worth about $13 billion, is attracting substantial capital investment as yield compression continues and the market matures, according to Colliers national director of transaction services Chris O’Driscoll. Low penetration rates O’Driscoll says that while land lease communities are growing in popularity, they still face a significant education gap. Penetration rates remain low within the target demographic, where the average age of residents is 65. A recent survey of retirees asking if they would prefer to move into a retirement village or a land lease community showed 39 per cent of respondents were unaware of the difference. “There’s ... an opportunity for education and a promotion [to] showcase land lease communities to offer the opportunity to increase these rates and obviously increase performance,” O’Driscoll told attendees of The Urban Developer’s Land Lease Communities summit this week. ▲ A rendering of some of the amenities at Millbray's Ashcroft project. But Millbray wants to change that narrative. It is developing a model that targets the under-served and relatively untapped younger demographic of the over-55s. Millbray general manager of development Matt Fedrick says there is a significant opportunty for the sector within the unpenetrated market. “With less than 2 per cent of the over-50s demographic opting to live in a land lease community, we have placed a focus on establishing a brand that appeals to a shifting target market,” Fedrick says. “Unlike many traditional approaches in the sector, Millbray has looked to position itself to appeal to a wider segment of the market.” The Flagstone community will comprise 293 homes, while a site at Highfields at Toowoomba has development approval for an undisclosed number of homes, and an Innes Park site on the Fraser Coast is currently under assessment for 301 homes. Macquarie’s real estate fund, Macquarie Real Estate Partners (MREP), is the owner of the Millbray brand, which will focus on catering to the nation’s growing over-50s market. Macquarie to build insitutional scale in LLC It is Macquarie’s latest advance into the living sectors after its strategic move into build-to-rent with the establishment of Local. It leverages the investment group’s expertise in establishing and growing real estate operating platforms, Macquarie Asset Management’s head of real estate for Asia Pacific James Kemp says. “We continue to have high conviction in the living sector including in the sub-sector focused on the aging population,” Kemp says. “Millbray is our latest investment in an Australian living platform and our 11th investment in living platforms globally. “As a fully integrated business, Millbray enables MREP to access the land lease communities sector in a way that seeks to maximise outcomes for residents, as well as for MREP.” ▲ Millbray’s Clayton Simons and Macquarie Group’s Eliza Sullivan (far right) with Queensland Assistant Minister for Planning, Housing and Regulation Rebecca Young, and her adviser Darcy Creighton at the Flagstone site. It’s an industry that is increasingly attracting institutional-grade investment, as more developers diversify into the seniors living sector. A long-term commitment Macquarie Asset Management managing director Justin Ayre says the challenge for investors is finding meaningful exposure within the fragmented sector “with an aligned and experienced management team”. Ayre says the aim is to build out the Millbray business to an institutional scale in the next five years. “We’re in it for the long-term,” Ayre says. “We’ve been looking at this sector for a long time ... and working out how we could get into the sector. “From an investment perspective, it is a challenging sector to get into. It’s tightly held, it’s very fragmented, dealing with lots of small individual developments in terms of just individual assets and transaction sizes.” Ayre says land lease communities are providing high-quality housing solutions for the rapidly growing over-50s population in Australia. “As a dedicated land lease communities group, Millbray is focused on designing, creating and operating communities that place its residents’ lifestyles first,” he says. “I see a huge opportunity for the sector to scale, but I think it also has to be in the right location.” Part of the Millbray point of difference will be its transparency around delivery of the community. “We recognise the importance our customer places on certainty when purchasing in a land lease community,” Ayre says. “Millbray has placed particular attention to detail in master planning and lifestyle design to provide customers with confidence of the community amenity and facilities which they can expect when moving into a Millbray community. We are committed to being competitive on speed of delivery of community amenity and facilities.” At the now under-way Ashcroft at Flagstone, 293 homes are to rise across the 12ha site as well as around 5000sq m of amenities. Amenities planned for the development include a 25m lap pool, gym, bowling green, pickleball courts and a cinema, all of which will be available for residents from the day they move in. The first of those residents are expected to move in next year.

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