With a housing crisis affecting cities and people, we're taking a look at the close ties between design and innovation in the residential sector.
How are emerging housing models responding to community needs? What role is design playing in ensuring projects can still succeed despite cost, supply and climate challenges? And what makes larger scale residential alternatives appealing to investors seeking a long-term revenue line?
In this episode you'll hear from one such investor in residential innovation. With projects in the UK, the US - and Australia - AustralianSuper is also an enthusiastic partner of pioneering build-to-rent-to-own housing developer, Assemble Communities, and quarter owner of the Assemble Futures.
Fiona Dunster, Senior Investment Director within the property team at AustralianSuper joined Residential sector co-lead Jeremy Schluter to explore why investing in quality, sustainable housing for people just makes good financial sense, and why elements like tool libraries, communal laundries, kitchen facilities, spaces for yoga, dog walking and book clubs are designed in from the start, to bring people together and encourage connection.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:01):
(upbeat music)
- From global design practise Hassell,
this is Hassell Talks,
a podcast series looking ata changing and complex world
and the opportunities for design
to create a better place for everyone.
It's a series that isunashamedly optimistic
about designing for abeautiful, inclusive,
(00:21):
and resilient future.
I'm Jeremy Schluter, I'm an architect
and I co-lead the residentialsector at Hassell,
which means I spend a lot of time thinking
about how we live and howwe can all live better.
And our guest today is Fiona Dunster,
senior investment director
within the propertyteam at AustralianSuper.
And I acknowledge theWurundjeri Woiwurrung people
(00:43):
of the Kulin nation,
their elders past and present
as traditional owners of thelands I live, work and play,
and pay my respects
to the First Nationspeople across Australia
as custodians of these lands.
With a housing crisisthat's starting to bite,
we're taking a closer look
at just how the residentialsector is responding.
(01:04):
The role of design and ensuringprojects can still succeed
despite the new challengesthey increasingly face,
and some alternatives
that will serve communities, economies,
and our world in makingplaces people love.
In our last episode, weheard from Michael McCormack,
co-founder of the Milieu Property Group,
about the socially aware
design savvy market that's emerging,
(01:25):
driving positive change in our cities
through a new type of residential project
with quality, wellbeing, location,
sustainability, and amenityat the top of the brief.
For this episode,
I wanted to take a closer look
at some emerging housing models
where residential designand housing affordability
meet at scale.
When we talk about creatingaffordable housing,
(01:46):
I think many people imagine this to mean
what we call council housing,
the post-war towers and apartment blocks
that as a model don't havewellbeing as a top priority
and aren't particularly welcoming or safe.
The British and other parts of Europe
have an established legacy
of public council and affordable housing,
so have over time improved these models.
In Australia, very littlepublic housing has been built
(02:07):
since the post-war era,
and so governments arelooking to the private sector
to step in and partner inmaking up the shortfall.
Programmes such as
the New South WalesCommunities Plus precincts
and Victoria's Big Build to name a few.
It is this context thathas seen organisations,
big investors like superannuation funds
identify the opportunity to get involved,
(02:29):
tapping the demographic shiftsof demand in the market.
Their involvement supportseconomic and community goals,
including sustainability
and generates a return on investment
through new affordable housing projects.
And my guest today, Fiona, isgoing to tell us all about it.
Part of her role as aproperty investment director
is to reposition the fund,
(02:49):
Australia's largest superannuation fund,
to become a hands-on very active investor
in the spaces super fundshaven't traditionally played in.
They're taking on things like planning
and construction risk.
They're bringing not just money,
but the smarts to the table as well.
Interestingly, their involvement
and taking a longer termview to investment returns
has also supported anincreased awareness of ESG
(03:11):
and sustainable development.
Something that not only the market
is looking for more andmore since the pandemic,
but also just makes good sense
from a long-term investment perspective
with climate risks only growing.
And so I wanted to ask Fiona
about one of their big projectsin the UK, Canada Water,
as well as the potentialAustralianSuper saw
in a new affordable housing model
(03:32):
targeting Australia's first home buyers,
known as Build to Rent to Ownwith a group called Assemble.
Build to Rent to Own is an idea
that creates an alternativepathway to home ownership,
enabling people to rentsecurely for five years
in a home they can make their own.
They can paint it, hangpictures up and so on,
all while saving their deposit
(03:52):
with the option to buy theirhome for a pre-agreed price
at the end of the lease period.
And the Assemble model, as you'll hear,
is proving very successful
with three locations and450 dwellings so far,
all underpinned by the belief
that every Australian deserves access
to an affordable, well-designed home,
and everyone deserves acommunity to come home to.
(04:14):
- There's an awful lot ofdiscussion at the moment
in the market around Build to Rent
and how it's all aboutestablishing a community
in the TOPSIS basis,
and that is absolutely fundamentalfor Build to Rent to Own.
From ours and Assemble's perspective,
the most critical thingabout the Assemble product
is ultimately that we want people
(04:35):
who come to rent to stay and buy.
The stickiness of the tenantsis absolutely the key.
So for us, it's about sense of community
and that is built throughthings like specific spaces
that encourage interaction.
So, Assemble's classic offer
is that there's communal laundry,
so you can bump into peoplewhen you're down there
(04:57):
sorting your washing orputting a load of washing on.
There's a dog wash.
And for some of our newer ones,
in fact, TSK is gonna have adog walk area up on the roof,
which is pretty cool.
There's a thing called the Assemble room
and that's where residents can do yoga,
they can work from there if they want to,
they can run their book club,
it has a kitchen facilityso they can book it out
(05:19):
for a dinner party if theywanna hold a dinner party there.
So really thoughtful functionalspaces and facilities.
And probably my favourite one
is the thing called the tool library.
- Ah, yes.
- That's not just a space,
but it's actually fully kitted out.
So it can have an ironor a drill or a level-
- So you can still make stuff.
- Yes, you can stillmake stuff down there.
There's a bench, there's awhole all range of things
(05:41):
that in your everyday lifenow and then you need.
But let's be honest,in lots of apartments,
you never have enough room
to actually be able tohave them all stored there.
So it gives you this fantasticfacility that you can access
and it's all run offthe Assemble platform.
People can just book it,
they can book a space orthey can book a hammer
(06:02):
or book a kettle and it allworks off this platform.
The platform also organises get togethers,
informal sort of social interaction.
So all these things create these layers
in engagement and value thatwe think goes well beyond
just the fact that thesesites are really well located.
(06:24):
The people who buy intoAssemble are buying in
because they're looking tohave a real sense of place
and have a real home.
They tend to not be transient
because if they were, they'djust go and rent something,
but they're renting with theobjective of ultimately owning.
And with that comes a reallymuch richer investment
both of their own timeinto their neighbours,
(06:47):
but also into their facilities
that they really want to useand where they find value.
So for us, we think that'sthe real differentiator
for the Build to Rent to Own
because there's fantastic Build to Rent
that's coming online,
but we think they don't havequite the same richness.
And another great example
is that the MacaulayRoad ground floor area
(07:08):
is an operating cafe by day
and it's quite a littlejumping spot at the moment,
it's doing really well,
but at nighttime itbecomes the residence area.
And no, they can't access the bar,
but they can certainlyaccess all the other areas
so that they hold amovie night down there,
they get together and just have...
It can be like an additionalbreakout area, lounge area.
(07:30):
We've often got residents down there
that are just working late at night,
using it as an informal workspace.
And we're finding that's-
- Rather than workingin their living room.
- Yeah.
Or even in the Assemble space,
which is actually up top on the roof,
which is really cool.
So it's giving our people a variety
and a diversity of spaces
that they can break out into in effect
(07:52):
well beyond their home butthey're within their home.
And we think that's just hugely important
and really valuable.
- And it will be great to seesome of the data come back in
as the residents do start to move in.
- Well, that's right.
And for us, the key isto watch that they stay.
There's no doubt that the design
and the careful sort of consideration
around offering a reallytruly sustainable way to live
(08:15):
is key for our target market.
The people who want tocome and live at Assemble
absolutely want to understand
how they're going to be able to live there
in a way that is going to enable them
to reduce the energy usage,
to be really actively involved
in living in spaces thatreally prioritise the cost,
(08:36):
natural materials,ventilation, low energy,
obviously proximity to public transport,
green spaces within,
all those obviously again lendthemselves to sustainability.
So all the Assemble products
will have to be within walkable distance
of not just public transportbut also external green spaces.
(08:56):
And one of the thingsthe Assemble model does
is it actually offers financialcoaching to our residents,
which is seen as a real benefit
'cause a lot of these peoplehaven't had the benefit before
of having someone who can work with them,
who looks at their lifestyleand looks at their costs
and actually helps them see a pathway
to actually being able to own,which is really important.
- Can you tell us a bit about why Super
(09:18):
was interested in that particular model?
- Yeah, look, we did quitea bit of investigation
into a number of developers and groups
that were looking attrying to address housing.
And I guess for us, the AssembleBuild to Rent to Own model
is really providing an opportunity
for a pathway to home ownership
that wasn't being achieved
(09:39):
or really offered by any other group.
So the AustralianSuper boardright at the top of the tree
has a Supporting AustraliaEconomy initiative,
which is a really importantinitiative of our board.
And we really saw Assemble'sBuild to Rent to Own model
as a way to support that initiative.
So for us, Build to Rent to Own
(10:00):
was a really attractive concept.
It gave us reasonable return,
it gave us a chance to enterthe BTF market locally,
so we've already got somemulti-family in the States
and we've had a biggerportfolio of that previously,
but it gave us a chanceto enter the market here.
We were really attracted
by the ability to scale the pipelines.
(10:22):
So not only have we invested
into investments within Assemble,
we've also invested inthe actual platform.
And the last thing really for us
was because Assemble was Melbourne based,
it gave us a chance to really get in
to understand this market
and this type of investmentin our local market,
which for us was really important as well.
- And Build to Rent to Own
aren't the only options orways of approaching housing
(10:45):
and achieving some of those great things
that you are talkingabout for AussieSuper,
for your investors, foryour board and so on.
Can you introduce us to thevision behind Canada Water?
- Yeah, so Canada Water,
just for those who don't know,
it's actually a 53-acreland region opportunity
(11:05):
in the heart of London.
So people might know
that we are the majorityowner of King's Cross,
which we've been quietlyinvolved in developing
over the last 20 or so years.
So Canada Water is our newest baby.
So we invested into CanadaWater with British Land
earlier in this year asa 50-50 joint venture.
(11:27):
And this is a 10-yearbuild out project for us.
So it's got a lot of similarfundamentals like King's Cross
in terms of placemakingwill be fundamental.
It is actually greener.
It's already got, oh gosh, something like,
I don't know, 50% or 12...
No, 12 acres of it isalready parkland established.
(11:48):
So it's a different type of proposition,
but it will be mixed use soit will have some office,
we'll have some lifesciences, some residential,
and there's a whole mix of types of homes.
So I think there's over 2,600 homes
are being built at CanadaWater over the period
and something like, I thinkit's 33% of them will be social
(12:11):
or what they call overthe intermediate homes,
which is affordable.
So a huge housinginvestment as part of that.
But the housing will be different there.
And look, it doesn't meanthat Build to Rent to Own
conceptually might not be part of it.
I mean it might be, thisis a very new concept
obviously developed by Australia
and conceived by Assemble.
But look, it might endup being part of that,
(12:33):
but it's certainly overthere with Canada Water.
It's a combination of more ofwhat we would call affordable
in the Australian market
in that it's really targeting
the essential worker type segment.
But then there is alsoa social housing element
which is being supported
by the community housingproviders over there as well
and the government.
(12:54):
So it will be a real blend of housing.
There'll also be townhouses apartment,
trying to meet the needs ofmore socioeconomic groups
that can afford to pay high prices
and be closer to things
like certain amenitiesthat they might value.
So it will be a real mix.
So it'll be fantastic.
(13:15):
Yeah.
- One of the statementswe've seen about Canada Water
is that it will set new standards
for what's possible in urban living,
working and regeneration
when entire precincts and communities
are designed around ESG, the ESG approach.
What do you anticipatethe outcomes might be?
- The reality is we want our residents
(13:38):
and our office workers and our visitors,
all to come and feel really attached
and connected to the environment.
So that will come throughin a range of things,
not just from a whole lotof beautiful parklands
and connection to theriver, physical connection,
but it'll come through inthe design of our buildings.
(14:00):
So we are looking at...
And it's interesting with the UK,
it's obviously different climate to here,
but how can we look atusing natural ventilation?
How can we look at lighting systems
and things which are going to support
being part of and occupying environments
that make you feel good?
(14:21):
Being the scale it is,
Canada Water has the opportunity
to be more than justa few green buildings,
it has a chance to actuallybe a truly green precinct.
And for us, that's one ofthe benefits again, of scale.
We can really invest intothose broader initiatives
which you wouldn't possiblyotherwise be able to justify
from just a pure investment perspective.
(14:42):
From a design perspectiveand a buildings perspective,
there's no doubt people are thinking more
about the value of carefully planning
and selecting materials,
thinking about glazing,thinking about openings,
thinking about things
(15:03):
that will ultimately haveimpacts to operating costs
and just health and wellbeing.
And I think that we are thinking about it
at a more sophisticated level now
than we were beforethe pandemic, for sure.
- And I'm certainly hearingmore residential developers
than ever before actually,talking about sustainability.
(15:26):
I feel like the residential sector
hasn't always been theleader that it could be
within the sustainabilityand resilience space.
And it's refreshing
to see that conversationhappening more and more
within the residential market.
- Yeah, I think that's right.
But again, of course,
we're all being driven bythe demand of the communities
(15:50):
that we are working in.
So it again, is a realmomentum building now,
it's a lot more than justtalking about sustainability
'cause they think it'sthe right thing to do.
There's a really genuine understanding now
of the imperative of it, which is great.
It's a shame it took a pandemic maybe
to give it the nudge it needed.
(16:11):
But anyway, we are there.
- And it seems to be...
You mentioned before, sticky spaces,
and the way that you aretalking about Canada Water
seems to be a similar almost mentality
to how the commercial developmentsector has been operating.
The acknowledgement that,
to retain tenants, youhave to build these things,
(16:31):
you have to create thesetypes of places and spaces.
And then by retainingthe tenants longer term
then they have a happier,healthier working life.
It seems more and more now
rather than simply selling off the plan,
the residential market
is kind of catching up to that approach.
(16:54):
- Yeah, I think that's right.
But I think we've comea long way to just...
In terms of the way we viewbuildings and we view spaces
within which we all dointeract and work and play.
And I think it'll be a prettypoor investment decision
these days to look atanything in isolation.
(17:15):
So for us, it really is aboutcreating spaces and places
that people really do want to invest,
not just their money into tobe a tenant or to live in,
but to actually investtheir heart and soul into
and becomes their place.
And to your term before,the sticky tenants,
(17:37):
the sticky residents, the sticky visitors,
the people who keep coming back,
that's what creates the thingthat's unique about a place
and the thing that makespeople want to return
and that's where the value is.
So for AustralianSuper,
ultimately we're an investor
and we have to not justcreate great places
(17:58):
that people want to come to,
but we have to create great places
that people wanna stay at or return to.
And so for us, it's not evena question of "should we?"
It's, we have to.
We have to come up with ways
of creating sustainable communities,
which are sustainable in every way.
And for us, sustainability means
being accessible physically, financially,
(18:20):
to all walks of life andall manner of people.
And that means that you have to create
wonderful, wonderfulplaces at the ground plane
that support everythingthat's happening above it.
So I think for us, it's just a no-brainer.
Otherwise, there'd beabsolutely no value in investing
because it would have novalue into the future.
(18:41):
And for us as long-term investors,
it's all about building andcreating spaces for the future.
- Well, and the beautiful thing
is that creating thosecommunities and those places
and spaces that people want to be at
and want to stay at and want to return to,
presumably lowers your risk
and makes better financial sense.
So you're doing good things
in order to support yourability to do more good things.
(19:06):
- It does.
But at the end of the day, as you know,
it's about being very robustin how you assess those risks
and how you also assess the opportunity.
For AustralianSuper,
this is where the partner is so critical.
So understanding their capabilities,
(19:27):
understanding their track record,
being confident
that we've got the rightpeople on the ground
who know the right questions,
who understand what reallyis risk and opportunity
associated with creating new places.
It's a very different proposition
to buy something that'salready humming along.
This goes back again to the criticality
(19:49):
of building the right peoplewithin AustralianSuper
and also surrounding ourselveswith the right partners
that we really see ourselves
being able to confidentlyand appropriately
assess those risks andmake those decisions.
But certainly, withthings like King's Cross,
we've learned a huge amount
and we're now leveraginga lot of that knowledge
(20:09):
into our new at scaleprecincts moving forward.
And we're certainly hopingto do a number of these,
Canada Water's the latest one.
And as I said, we've got agreat partner in British Land
and we feel reallyconfident and comfortable
that we've assessedwhat the risks might be
for Canada Water,
(20:30):
but obviously the opportunities.
And we feel that we'll beable to deliver on that
and deliver something that's great,
not just for our members,
but for the community morebroadly within London.
We'll look for these all around the world,
to be honest with you now,
but one of the mostimportant things upfront
will be who will be doing it with us.
And that's a big partof our risk assessment.
(20:52):
- And the impact of peopleand communities to housing,
to the future of housing.
And I know the pandemic issomething in the past now,
we're still dealing withit, it's still around,
but that has changed as well.
I think the art ofpurposefully and intentionally
creating communities with people
(21:13):
potentially before thepandemic has been forgotten,
a little over the decade
to a point where it's common for people
not to know their neighbours.
How do you think the pandemic has changed
how we view our communities
and assess the strength of neighbourhoods?
And how is that having an impactin the residential sector?
(21:34):
- Yeah, look, I thinkyou've said it beautifully.
Actually, I think that's right.
I think the pandemic hasreally reminded us all
about what's so important
and the importance of people around us,
our families and our friends,and the people we work with.
But look, I think it's playingto the Assemble proposition,
to be honest.
In terms of housing styles
and housing formats and housing models,
(21:58):
I think we're gonna seemore and more around
the value proposition of residential
being not just your house,
not just the space thatyou live in and you occupy,
but what else comes with it?
And how does that support
that much, much strongersense of community
that I think we're all looking for?
- And I think one of thepositive developments
in the housing market overthe last probably five years
(22:21):
is that it's no longer aone size fits all approach
to providing housing for Australia,
for anywhere around the world.
There are new little innovationsand models and distortions
in the housing market,
which are providing more choice
and more different alternatives
for people to live how they wanna live,
(22:41):
where they wanna live.
So I wonder if, yeah, as you say,
there are some silver linings,
but it's interesting as wellthat there's no silver bullet.
- No, I think there's not.
I mean, at the end of the day,
the most basic is that we havea whole group of Australians
who fundamentally don'thave the earning capacity
(23:05):
to rent and/or in a lot ofAustralia's bigger cities,
in an environment where housing prices
continue to either increase
or have stabilised and they're still high.
And we've got costs onlycontinue to increase
and wage growth minimal, if at all.
It's hard to see how we'regonna actually be able to house
(23:27):
a lot of these peoplewithout major intervention.
I think there's such asupply shortage in Australia,
it's just compoundingall these other problems.
If we didn't have supplyshortage of housing stock,
it would have obviously animpact on house pricing.
And even if we weren't building anything,
(23:47):
we'd be in a much better situation.
But the reality is we've gota massive housing shortage,
and with immigrationstarting to increase again,
which is a great thing for Australia,
then obviously thosepressures only compound.
I don't think it's gonna bea quick or easy solution.
And the government'srecent Accord announcement,
which obviously we're supportive of,
(24:09):
and we are working closely
with the other superannuationfunds, trying to fund family
to work out how we canpotentially participate
in the housing Accord in a meaningful way.
It's great to see
that the government has putthis initiative forward.
There has to be some things,
some progress made on thingslike planning, for example,
(24:30):
just to increase the speedof being able to open up land
or get approvals
through to actually enablethe housing to be delivered,
land supply...
As to your point, thereare lots of innovative ways
that maybe we can look at the government
participating with housing providers,
(24:50):
whether it's super funds or others
which might involve long-term,
a hundred year leases on land,
for example, it's just an idea.
I'm just thinking about whichenables the cost, perhaps,
of delivering that housingto be significantly reduced
for the end renter or buyer.
So I think we are in a time of complexity
(25:13):
and it's really unknown
with what's going oneconomically and politically
around the world.
And certainly I think
it's also a great chance for innovation.
Yeah, looking forward to seeinghow we're gonna solve this.
(upbeat music)
- I left my chat with Fionafeeling so optimistic.
(25:34):
For too long, the residentialmarket has been profit-driven,
based on short-term gains,
leaving the residents and ourcities as an afterthought.
This has left us with a legacy
of small, questionable quality,unaffordable apartments
that are not really future-proofed
for the climate crisis we're facing.
With larger players like AustralianSuper,
getting behind new alternative models
(25:55):
such as Build to Rent to Own,
we are finally seeing thoseforward thinking innovations
to developing qualityhousing with humanity,
apartments that are well designed,
with people and the city in mind
to present as a real alternative
to the suburban quarter acre block.
Dwellings that arefundamentally sustainable,
rather than just green-washed,
that also supports social inclusion
(26:16):
and improved housing access,
backed by a private sector
who see the value inlong-term return opportunity.
These are not new ideas.
In fact, they were fundamental
to the Flour Mill of Summer Hill precinct
we designed for developerEG, completed in 2019,
before the pandemic.
The project master plangave over 40% of the site
to a network of quality public spaces.
(26:39):
And the re-lifing of somebeautiful heritage buildings.
These community investments
have been supported by acurated programme of markets,
playgroups, dog walkers and more.
Creating a strong sense ofbelonging and human connection.
Homes at Flour Mill of Summer Hill
are very much in high demand,
with a community thatthrived during the pandemic,
an embedded future-proof design
(26:59):
and quality outcome has madeit a place people love to be.
I think the future looksbright and I remain optimistic.
With the right conversations
between both public andprivate across the industry
and designers, of course,
we can unlock innovation and creativity
and ultimately quality housing
for people in strongcommunities and cities.
(27:23):
Thank you to Fiona and AustralianSuper
for her time and enthusiasm.
And thanks to you, our listeners.
We know you're as passionate
about the role design plays
in creating a beautiful,resilient and inclusive future
as we are.
I'm Jeremy Schluter.
You've been listening to anepisode of Hassell Talks.
This episode was produced by Prue Vincent.
(upbeat music)
- From global design practise Hassell,
this is Hassell Talks,
a podcast series looking ata changing and complex world
and the opportunities for design
to create a better place for everyone.
It's a series that isunashamedly optimistic
about designing for abeautiful, inclusive,
(00:21):
and resilient future.
I'm Jeremy Schluter, I'm an architect
and I co-lead the residentialsector at Hassell,
which means I spend a lot of time thinking
about how we live and howwe can all live better.
And our guest today is Fiona Dunster,
senior investment director
within the propertyteam at AustralianSuper.
And I acknowledge theWurundjeri Woiwurrung people
(00:43):
of the Kulin nation,
their elders past and present
as traditional owners of thelands I live, work and play,
and pay my respects
to the First Nationspeople across Australia
as custodians of these lands.
With a housing crisisthat's starting to bite,
we're taking a closer look
at just how the residentialsector is responding.
(01:04):
The role of design and ensuringprojects can still succeed
despite the new challengesthey increasingly face,
and some alternatives
that will serve communities, economies,
and our world in makingplaces people love.
In our last episode, weheard from Michael McCormack,
co-founder of the Milieu Property Group,
about the socially aware
design savvy market that's emerging,
(01:25):
driving positive change in our cities
through a new type of residential project
with quality, wellbeing, location,
sustainability, and amenityat the top of the brief.
For this episode,
I wanted to take a closer look
at some emerging housing models
where residential designand housing affordability
meet at scale.
When we talk about creatingaffordable housing,
(01:46):
I think many people imagine this to mean
what we call council housing,
the post-war towers and apartment blocks
that as a model don't havewellbeing as a top priority
and aren't particularly welcoming or safe.
The British and other parts of Europe
have an established legacy
of public council and affordable housing,
so have over time improved these models.
In Australia, very littlepublic housing has been built
(02:07):
since the post-war era,
and so governments arelooking to the private sector
to step in and partner inmaking up the shortfall.
Programmes such as
the New South WalesCommunities Plus precincts
and Victoria's Big Build to name a few.
It is this context thathas seen organisations,
big investors like superannuation funds
identify the opportunity to get involved,
(02:29):
tapping the demographic shiftsof demand in the market.
Their involvement supportseconomic and community goals,
including sustainability
and generates a return on investment
through new affordable housing projects.
And my guest today, Fiona, isgoing to tell us all about it.
Part of her role as aproperty investment director
is to reposition the fund,
(02:49):
Australia's largest superannuation fund,
to become a hands-on very active investor
in the spaces super fundshaven't traditionally played in.
They're taking on things like planning
and construction risk.
They're bringing not just money,
but the smarts to the table as well.
Interestingly, their involvement
and taking a longer termview to investment returns
has also supported anincreased awareness of ESG
(03:11):
and sustainable development.
Something that not only the market
is looking for more andmore since the pandemic,
but also just makes good sense
from a long-term investment perspective
with climate risks only growing.
And so I wanted to ask Fiona
about one of their big projectsin the UK, Canada Water,
as well as the potentialAustralianSuper saw
in a new affordable housing model
(03:32):
targeting Australia's first home buyers,
known as Build to Rent to Ownwith a group called Assemble.
Build to Rent to Own is an idea
that creates an alternativepathway to home ownership,
enabling people to rentsecurely for five years
in a home they can make their own.
They can paint it, hangpictures up and so on,
all while saving their deposit
(03:52):
with the option to buy theirhome for a pre-agreed price
at the end of the lease period.
And the Assemble model, as you'll hear,
is proving very successful
with three locations and450 dwellings so far,
all underpinned by the belief
that every Australian deserves access
to an affordable, well-designed home,
and everyone deserves acommunity to come home to.
(04:14):
- There's an awful lot ofdiscussion at the moment
in the market around Build to Rent
and how it's all aboutestablishing a community
in the TOPSIS basis,
and that is absolutely fundamentalfor Build to Rent to Own.
From ours and Assemble's perspective,
the most critical thingabout the Assemble product
is ultimately that we want people
(04:35):
who come to rent to stay and buy.
The stickiness of the tenantsis absolutely the key.
So for us, it's about sense of community
and that is built throughthings like specific spaces
that encourage interaction.
So, Assemble's classic offer
is that there's communal laundry,
so you can bump into peoplewhen you're down there
(04:57):
sorting your washing orputting a load of washing on.
There's a dog wash.
And for some of our newer ones,
in fact, TSK is gonna have adog walk area up on the roof,
which is pretty cool.
There's a thing called the Assemble room
and that's where residents can do yoga,
they can work from there if they want to,
they can run their book club,
it has a kitchen facilityso they can book it out
(05:19):
for a dinner party if theywanna hold a dinner party there.
So really thoughtful functionalspaces and facilities.
And probably my favourite one
is the thing called the tool library.
- Ah, yes.
- That's not just a space,
but it's actually fully kitted out.
So it can have an ironor a drill or a level-
- So you can still make stuff.
- Yes, you can stillmake stuff down there.
There's a bench, there's awhole all range of things
(05:41):
that in your everyday lifenow and then you need.
But let's be honest,in lots of apartments,
you never have enough room
to actually be able tohave them all stored there.
So it gives you this fantasticfacility that you can access
and it's all run offthe Assemble platform.
People can just book it,
they can book a space orthey can book a hammer
(06:02):
or book a kettle and it allworks off this platform.
The platform also organises get togethers,
informal sort of social interaction.
So all these things create these layers
in engagement and value thatwe think goes well beyond
just the fact that thesesites are really well located.
(06:24):
The people who buy intoAssemble are buying in
because they're looking tohave a real sense of place
and have a real home.
They tend to not be transient
because if they were, they'djust go and rent something,
but they're renting with theobjective of ultimately owning.
And with that comes a reallymuch richer investment
both of their own timeinto their neighbours,
(06:47):
but also into their facilities
that they really want to useand where they find value.
So for us, we think that'sthe real differentiator
for the Build to Rent to Own
because there's fantastic Build to Rent
that's coming online,
but we think they don't havequite the same richness.
And another great example
is that the MacaulayRoad ground floor area
(07:08):
is an operating cafe by day
and it's quite a littlejumping spot at the moment,
it's doing really well,
but at nighttime itbecomes the residence area.
And no, they can't access the bar,
but they can certainlyaccess all the other areas
so that they hold amovie night down there,
they get together and just have...
It can be like an additionalbreakout area, lounge area.
(07:30):
We've often got residents down there
that are just working late at night,
using it as an informal workspace.
And we're finding that's-
- Rather than workingin their living room.
- Yeah.
Or even in the Assemble space,
which is actually up top on the roof,
which is really cool.
So it's giving our people a variety
and a diversity of spaces
that they can break out into in effect
(07:52):
well beyond their home butthey're within their home.
And we think that's just hugely important
and really valuable.
- And it will be great to seesome of the data come back in
as the residents do start to move in.
- Well, that's right.
And for us, the key isto watch that they stay.
There's no doubt that the design
and the careful sort of consideration
around offering a reallytruly sustainable way to live
(08:15):
is key for our target market.
The people who want tocome and live at Assemble
absolutely want to understand
how they're going to be able to live there
in a way that is going to enable them
to reduce the energy usage,
to be really actively involved
in living in spaces thatreally prioritise the cost,
(08:36):
natural materials,ventilation, low energy,
obviously proximity to public transport,
green spaces within,
all those obviously again lendthemselves to sustainability.
So all the Assemble products
will have to be within walkable distance
of not just public transportbut also external green spaces.
(08:56):
And one of the thingsthe Assemble model does
is it actually offers financialcoaching to our residents,
which is seen as a real benefit
'cause a lot of these peoplehaven't had the benefit before
of having someone who can work with them,
who looks at their lifestyleand looks at their costs
and actually helps them see a pathway
to actually being able to own,which is really important.
- Can you tell us a bit about why Super
(09:18):
was interested in that particular model?
- Yeah, look, we did quitea bit of investigation
into a number of developers and groups
that were looking attrying to address housing.
And I guess for us, the AssembleBuild to Rent to Own model
is really providing an opportunity
for a pathway to home ownership
that wasn't being achieved
(09:39):
or really offered by any other group.
So the AustralianSuper boardright at the top of the tree
has a Supporting AustraliaEconomy initiative,
which is a really importantinitiative of our board.
And we really saw Assemble'sBuild to Rent to Own model
as a way to support that initiative.
So for us, Build to Rent to Own
(10:00):
was a really attractive concept.
It gave us reasonable return,
it gave us a chance to enterthe BTF market locally,
so we've already got somemulti-family in the States
and we've had a biggerportfolio of that previously,
but it gave us a chanceto enter the market here.
We were really attracted
by the ability to scale the pipelines.
(10:22):
So not only have we invested
into investments within Assemble,
we've also invested inthe actual platform.
And the last thing really for us
was because Assemble was Melbourne based,
it gave us a chance to really get in
to understand this market
and this type of investmentin our local market,
which for us was really important as well.
- And Build to Rent to Own
aren't the only options orways of approaching housing
(10:45):
and achieving some of those great things
that you are talkingabout for AussieSuper,
for your investors, foryour board and so on.
Can you introduce us to thevision behind Canada Water?
- Yeah, so Canada Water,
just for those who don't know,
it's actually a 53-acreland region opportunity
(11:05):
in the heart of London.
So people might know
that we are the majorityowner of King's Cross,
which we've been quietlyinvolved in developing
over the last 20 or so years.
So Canada Water is our newest baby.
So we invested into CanadaWater with British Land
earlier in this year asa 50-50 joint venture.
(11:27):
And this is a 10-yearbuild out project for us.
So it's got a lot of similarfundamentals like King's Cross
in terms of placemakingwill be fundamental.
It is actually greener.
It's already got, oh gosh, something like,
I don't know, 50% or 12...
No, 12 acres of it isalready parkland established.
(11:48):
So it's a different type of proposition,
but it will be mixed use soit will have some office,
we'll have some lifesciences, some residential,
and there's a whole mix of types of homes.
So I think there's over 2,600 homes
are being built at CanadaWater over the period
and something like, I thinkit's 33% of them will be social
(12:11):
or what they call overthe intermediate homes,
which is affordable.
So a huge housinginvestment as part of that.
But the housing will be different there.
And look, it doesn't meanthat Build to Rent to Own
conceptually might not be part of it.
I mean it might be, thisis a very new concept
obviously developed by Australia
and conceived by Assemble.
But look, it might endup being part of that,
(12:33):
but it's certainly overthere with Canada Water.
It's a combination of more ofwhat we would call affordable
in the Australian market
in that it's really targeting
the essential worker type segment.
But then there is alsoa social housing element
which is being supported
by the community housingproviders over there as well
and the government.
(12:54):
So it will be a real blend of housing.
There'll also be townhouses apartment,
trying to meet the needs ofmore socioeconomic groups
that can afford to pay high prices
and be closer to things
like certain amenitiesthat they might value.
So it will be a real mix.
So it'll be fantastic.
(13:15):
Yeah.
- One of the statementswe've seen about Canada Water
is that it will set new standards
for what's possible in urban living,
working and regeneration
when entire precincts and communities
are designed around ESG, the ESG approach.
What do you anticipatethe outcomes might be?
- The reality is we want our residents
(13:38):
and our office workers and our visitors,
all to come and feel really attached
and connected to the environment.
So that will come throughin a range of things,
not just from a whole lotof beautiful parklands
and connection to theriver, physical connection,
but it'll come through inthe design of our buildings.
(14:00):
So we are looking at...
And it's interesting with the UK,
it's obviously different climate to here,
but how can we look atusing natural ventilation?
How can we look at lighting systems
and things which are going to support
being part of and occupying environments
that make you feel good?
(14:21):
Being the scale it is,
Canada Water has the opportunity
to be more than justa few green buildings,
it has a chance to actuallybe a truly green precinct.
And for us, that's one ofthe benefits again, of scale.
We can really invest intothose broader initiatives
which you wouldn't possiblyotherwise be able to justify
from just a pure investment perspective.
(14:42):
From a design perspectiveand a buildings perspective,
there's no doubt people are thinking more
about the value of carefully planning
and selecting materials,
thinking about glazing,thinking about openings,
thinking about things
(15:03):
that will ultimately haveimpacts to operating costs
and just health and wellbeing.
And I think that we are thinking about it
at a more sophisticated level now
than we were beforethe pandemic, for sure.
- And I'm certainly hearingmore residential developers
than ever before actually,talking about sustainability.
(15:26):
I feel like the residential sector
hasn't always been theleader that it could be
within the sustainabilityand resilience space.
And it's refreshing
to see that conversationhappening more and more
within the residential market.
- Yeah, I think that's right.
But again, of course,
we're all being driven bythe demand of the communities
(15:50):
that we are working in.
So it again, is a realmomentum building now,
it's a lot more than justtalking about sustainability
'cause they think it'sthe right thing to do.
There's a really genuine understanding now
of the imperative of it, which is great.
It's a shame it took a pandemic maybe
to give it the nudge it needed.
(16:11):
But anyway, we are there.
- And it seems to be...
You mentioned before, sticky spaces,
and the way that you aretalking about Canada Water
seems to be a similar almost mentality
to how the commercial developmentsector has been operating.
The acknowledgement that,
to retain tenants, youhave to build these things,
(16:31):
you have to create thesetypes of places and spaces.
And then by retainingthe tenants longer term
then they have a happier,healthier working life.
It seems more and more now
rather than simply selling off the plan,
the residential market
is kind of catching up to that approach.
(16:54):
- Yeah, I think that's right.
But I think we've comea long way to just...
In terms of the way we viewbuildings and we view spaces
within which we all dointeract and work and play.
And I think it'll be a prettypoor investment decision
these days to look atanything in isolation.
(17:15):
So for us, it really is aboutcreating spaces and places
that people really do want to invest,
not just their money into tobe a tenant or to live in,
but to actually investtheir heart and soul into
and becomes their place.
And to your term before,the sticky tenants,
(17:37):
the sticky residents, the sticky visitors,
the people who keep coming back,
that's what creates the thingthat's unique about a place
and the thing that makespeople want to return
and that's where the value is.
So for AustralianSuper,
ultimately we're an investor
and we have to not justcreate great places
(17:58):
that people want to come to,
but we have to create great places
that people wanna stay at or return to.
And so for us, it's not evena question of "should we?"
It's, we have to.
We have to come up with ways
of creating sustainable communities,
which are sustainable in every way.
And for us, sustainability means
being accessible physically, financially,
(18:20):
to all walks of life andall manner of people.
And that means that you have to create
wonderful, wonderfulplaces at the ground plane
that support everythingthat's happening above it.
So I think for us, it's just a no-brainer.
Otherwise, there'd beabsolutely no value in investing
because it would have novalue into the future.
(18:41):
And for us as long-term investors,
it's all about building andcreating spaces for the future.
- Well, and the beautiful thing
is that creating thosecommunities and those places
and spaces that people want to be at
and want to stay at and want to return to,
presumably lowers your risk
and makes better financial sense.
So you're doing good things
in order to support yourability to do more good things.
(19:06):
- It does.
But at the end of the day, as you know,
it's about being very robustin how you assess those risks
and how you also assess the opportunity.
For AustralianSuper,
this is where the partner is so critical.
So understanding their capabilities,
(19:27):
understanding their track record,
being confident
that we've got the rightpeople on the ground
who know the right questions,
who understand what reallyis risk and opportunity
associated with creating new places.
It's a very different proposition
to buy something that'salready humming along.
This goes back again to the criticality
(19:49):
of building the right peoplewithin AustralianSuper
and also surrounding ourselveswith the right partners
that we really see ourselves
being able to confidentlyand appropriately
assess those risks andmake those decisions.
But certainly, withthings like King's Cross,
we've learned a huge amount
and we're now leveraginga lot of that knowledge
(20:09):
into our new at scaleprecincts moving forward.
And we're certainly hopingto do a number of these,
Canada Water's the latest one.
And as I said, we've got agreat partner in British Land
and we feel reallyconfident and comfortable
that we've assessedwhat the risks might be
for Canada Water,
(20:30):
but obviously the opportunities.
And we feel that we'll beable to deliver on that
and deliver something that's great,
not just for our members,
but for the community morebroadly within London.
We'll look for these all around the world,
to be honest with you now,
but one of the mostimportant things upfront
will be who will be doing it with us.
And that's a big partof our risk assessment.
(20:52):
- And the impact of peopleand communities to housing,
to the future of housing.
And I know the pandemic issomething in the past now,
we're still dealing withit, it's still around,
but that has changed as well.
I think the art ofpurposefully and intentionally
creating communities with people
(21:13):
potentially before thepandemic has been forgotten,
a little over the decade
to a point where it's common for people
not to know their neighbours.
How do you think the pandemic has changed
how we view our communities
and assess the strength of neighbourhoods?
And how is that having an impactin the residential sector?
(21:34):
- Yeah, look, I thinkyou've said it beautifully.
Actually, I think that's right.
I think the pandemic hasreally reminded us all
about what's so important
and the importance of people around us,
our families and our friends,and the people we work with.
But look, I think it's playingto the Assemble proposition,
to be honest.
In terms of housing styles
and housing formats and housing models,
(21:58):
I think we're gonna seemore and more around
the value proposition of residential
being not just your house,
not just the space thatyou live in and you occupy,
but what else comes with it?
And how does that support
that much, much strongersense of community
that I think we're all looking for?
- And I think one of thepositive developments
in the housing market overthe last probably five years
(22:21):
is that it's no longer aone size fits all approach
to providing housing for Australia,
for anywhere around the world.
There are new little innovationsand models and distortions
in the housing market,
which are providing more choice
and more different alternatives
for people to live how they wanna live,
(22:41):
where they wanna live.
So I wonder if, yeah, as you say,
there are some silver linings,
but it's interesting as wellthat there's no silver bullet.
- No, I think there's not.
I mean, at the end of the day,
the most basic is that we havea whole group of Australians
who fundamentally don'thave the earning capacity
(23:05):
to rent and/or in a lot ofAustralia's bigger cities,
in an environment where housing prices
continue to either increase
or have stabilised and they're still high.
And we've got costs onlycontinue to increase
and wage growth minimal, if at all.
It's hard to see how we'regonna actually be able to house
(23:27):
a lot of these peoplewithout major intervention.
I think there's such asupply shortage in Australia,
it's just compoundingall these other problems.
If we didn't have supplyshortage of housing stock,
it would have obviously animpact on house pricing.
And even if we weren't building anything,
(23:47):
we'd be in a much better situation.
But the reality is we've gota massive housing shortage,
and with immigrationstarting to increase again,
which is a great thing for Australia,
then obviously thosepressures only compound.
I don't think it's gonna bea quick or easy solution.
And the government'srecent Accord announcement,
which obviously we're supportive of,
(24:09):
and we are working closely
with the other superannuationfunds, trying to fund family
to work out how we canpotentially participate
in the housing Accord in a meaningful way.
It's great to see
that the government has putthis initiative forward.
There has to be some things,
some progress made on thingslike planning, for example,
(24:30):
just to increase the speedof being able to open up land
or get approvals
through to actually enablethe housing to be delivered,
land supply...
As to your point, thereare lots of innovative ways
that maybe we can look at the government
participating with housing providers,
(24:50):
whether it's super funds or others
which might involve long-term,
a hundred year leases on land,
for example, it's just an idea.
I'm just thinking about whichenables the cost, perhaps,
of delivering that housingto be significantly reduced
for the end renter or buyer.
So I think we are in a time of complexity
(25:13):
and it's really unknown
with what's going oneconomically and politically
around the world.
And certainly I think
it's also a great chance for innovation.
Yeah, looking forward to seeinghow we're gonna solve this.
(upbeat music)
- I left my chat with Fionafeeling so optimistic.
(25:34):
For too long, the residentialmarket has been profit-driven,
based on short-term gains,
leaving the residents and ourcities as an afterthought.
This has left us with a legacy
of small, questionable quality,unaffordable apartments
that are not really future-proofed
for the climate crisis we're facing.
With larger players like AustralianSuper,
getting behind new alternative models
(25:55):
such as Build to Rent to Own,
we are finally seeing thoseforward thinking innovations
to developing qualityhousing with humanity,
apartments that are well designed,
with people and the city in mind
to present as a real alternative
to the suburban quarter acre block.
Dwellings that arefundamentally sustainable,
rather than just green-washed,
that also supports social inclusion
(26:16):
and improved housing access,
backed by a private sector
who see the value inlong-term return opportunity.
These are not new ideas.
In fact, they were fundamental
to the Flour Mill of Summer Hill precinct
we designed for developerEG, completed in 2019,
before the pandemic.
The project master plangave over 40% of the site
to a network of quality public spaces.
(26:39):
And the re-lifing of somebeautiful heritage buildings.
These community investments
have been supported by acurated programme of markets,
playgroups, dog walkers and more.
Creating a strong sense ofbelonging and human connection.
Homes at Flour Mill of Summer Hill
are very much in high demand,
with a community thatthrived during the pandemic,
an embedded future-proof design
(26:59):
and quality outcome has madeit a place people love to be.
I think the future looksbright and I remain optimistic.
With the right conversations
between both public andprivate across the industry
and designers, of course,
we can unlock innovation and creativity
and ultimately quality housing
for people in strongcommunities and cities.
(27:23):
Thank you to Fiona and AustralianSuper
for her time and enthusiasm.
And thanks to you, our listeners.
We know you're as passionate
about the role design plays
in creating a beautiful,resilient and inclusive future
as we are.
I'm Jeremy Schluter.
You've been listening to anepisode of Hassell Talks.
This episode was produced by Prue Vincent.
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