THE federal government’s Clean Energy Finance Corporation (CEFC) is investing $100 million in an AXA IM Alts build-to-rent strategy which aims to deliver at least half of its units as affordable housing for key workers.
The AXA IM Alts fund is targeting as many as 3,000 apartments. At least 50% will be offered at a discount to equivalent market rents for means-tested tenants in key employment hubs in major cities.
Homes will be built as highly energy efficient, fully electric and capable of being powered by renewables while driving reductions in embodied carbon.
“The strategy creates a replicable model for the delivery of affordable housing into the market, while leading with sustainability for tenants who have traditionally been locked out of the benefits of clean energy technologies and sustainable living,” the CEFC said.
Future projects will target a minimum 5-star Green Star Building certification and a minimum average 7.5 star NatHERs home energy rating.
The first investment is a 397-unit residential development in western Sydney’s Westmead, adjacent to one of the largest health, education, research and training precincts in Australia. Completion is expected in late 2025, and the project will provide housing for approximately around 1,000 people, with half aimed at healthcare, teaching and emergency response workers in the precinct as affordable housing.
AXA IM Alts, which has an established track record in Europe, has partnered with Community Housing Provider, St George Community Housing (SGCH) to manage the Westmead property from completion along with other future projects in NSW.
The fund had secured a $300 million backing from Housing Australia in 2022 and is aiming to generate $1 billion in equity in all to fulfil its homes target.
“The CEFC’s investment is an important milestone in the continued success of our Australian affordable housing programme and our wider global residential strategy, which we intend to grow alongside new capital partners,” said head of Australia at AXA IM Alts, Antoine Mesnage.
“It also reflects our shared approach to addressing the shortage of good quality, sustainable housing stock for key workers in Australian cities.”
An Aware Super report in 2023 found that a chronic shortage of affordable housing for essential workers located near their workplace in Australia’s capital cities is costing the nation $64 billion.
“The Westmead project, our strategy’s first investment, is expected to complete in 2025 and will aim to enable essential workers to live in good quality, institutionally managed accommodation closer to their place of employment. We seek to replicate this model at scale across Australia, with an initial focus on Sydney, Melbourne and Brisbane, and we have a number of pipeline opportunities identified to grow and diversify the portfolio further.
National private sector “for purpose” organisation and registered charity, Housing All Australias, has in collaboration with PEXA, engineered Australia’s first digital essential worker housing register, which integrates with HAA’s Progressive Residential Affordability Development Solution (PRADS). The register could unlock private sector investment in sorely-needed essential worker housing.
The property industry and government have been looking at solutions to solve the broader national housing crisis that has been driven by a huge mismatch between supply and demand. It has forced vacancies to historic lows, driving rents up, and stretched affordability in the housing market to its worst level on record.
CEFC CEO Ian Learmonth said tenants can face challenges in implementing energy efficiency and emissions reduction measures in their rental properties
“This new strategy is an important step in an equitable energy transition, taking an integrated approach to leverage global best practice and drive clean energy outcomes to provide benefits to tenants, and more broadly to help to address housing supply and affordability.
“This investment brings the benefits of sustainability to an important segment of Australia’s residential sector, at scale. Making homes more resilient, healthy and comfortable by lifting sustainability standards helps meet our current and future housing needs as we move towards net zero emissions and unlocks the advantages of sustainable living for more Australians.”
Buildings account for more than 50% of Australia’s electricity use and almost 25% of emissions across the economy, according to the government research, while residential buildings are responsible for around 24% of overall electricity use and more than 10% of total carbon emissions in Australia.
A recent RMI study showed that by decreasing energy costs associated with household energy use and transportation, energy efficiency improvements can provide disproportionate benefits for low-income users as energy costs typically make up a bigger proportion of household budgets.
