PGIM Expands APAC Rental Housing Portfolio With China, Australia Deals

PGIM Expands APAC Rental Housing Portfolio With China, Australia Deals

PGIM teamed with CJIA to acquire a 500-unit apartment building at Shanghai Baoshan Powerlong City

PGIM Real Estate has added to its Asia Pacific rental housing portfolio, 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 buy an apartment building within the Shanghai Baoshan Powerlong City complex from its developer, Hong Kong-listed Powerlong. Company representatives confirmed to Mingtiandi that the company’s operating partner in the acquisitiion is Chengjia (or CJIA), an apartment operator under mainland hospitality giant H World Group, which was formerly known as Huazhu Hotels Group.

In Australia, PGIM joined forces with fund manager Point Capital on a residential-for-rent programmatic JV seeded with a project in Sydney’s Parramatta area and one in Brisbane’s Fortitude Valley. Each is planned to have 300 smaller-scale rental apartments.

Benett Theseira, head of Asia Pacific at PGIM Real Estate, said shifting demographic trends and worsening homeownership affordability are driving demand for rental housing across major cities.

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

Racing to Supply Beds

PGIM, a subsidiary of American finance giant Prudential, made its latest acquisitions on behalf of its value-add, core and core-plus strategies in Asia Pacific.

PGIM Real Estate APAC head Benett Theseira

The 19-storey purpose-built apartment building at Baoshan Powerlong City comprises over 500 apartments and provides common areas and facilities, including a gymnasium and lounge, PGIM said. Part of a commercial hub with a shopping mall, office blocks and hotels, the property is targeted to meet the long-stay living needs of young professionals.

The Australian assets at 458 Wickham Street in Brisbane and 7 Macquarie Street in Sydney were selected on account of their status as key employment, residential and entertainment hubs located near public transport.

The JV with Point Capital, the firm behind the Tribe hotel chain, aims to develop a further two to three projects of similar size with an initial portfolio target of 1,250 to 1,500 beds at completion. The proprietary modular building method that was used in Tribe will be adopted to deliver the venture’s residential-for-rent projects.

“Our JV with Point Capital presents a very exciting opportunity as it will deliver much-needed rental stock into a significantly undersupplied residential rental market in Australia,” said Steve Bulloch, head of Australia for PGIM Real Estate.

Follow-Up on Hong Kong

The transactions in Shanghai and Australia follow PGIM’s acquisition of two hotels in Hong Kong last year and their conversion into modern co-living apartments this year.

Weave Studios Kowloon West, a joint venture with local developer Weave Living, has been converted to 435 fully furnished studio apartments over 29 floors. Situated near Olympic MTR Station, the property formerly known as the Rosedale Hotel opened in May and offers 15,000 square feet of open area with shared amenities.

Dash Living on Hollywood, a 22-storey former Travelodge on Hollywood Road in Central, is being transformed into a co-living facility with 148 rooms and community facilities for tenants.

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

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Author: Christopher Caillavet

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