[+] Culture of Community: Arklife’s Build-to-Rent Success Story


As a suburban boy from Brisbane, Scott Ponton’s fate to lead Queensland’s charge of the country’s booming property asset class was clearly sealed.

“My father was a builder-developer and I grew up in an eight-flat block in the western Brisbane suburb of Corinda,” explains the founder and managing director of Arklife.

“Dad owned all these apartments and my brother and I, on Saturday mornings, would collect the rent.

“It was the time when people left their front door open. They just left the rent on the kitchen table and we scribbled a receipt.

“Then in the afternoon we would have a barbecue in the back and all the residents would join us, and we would play cricket or touch football.”

Not that he could have known it at the time, but it was a fundamental part of Ponton’s education which, honed by a 25+ year track record in residential and commercial real estate development, would be key to shaping Arklife’s successful community building model.

As a vertically integrated specialist developer, owner and operator of construction-to-lease assets, Arklife currently has projects worth just over $700 million under management.

All of them, including its third and biggest yet-to-be-revealed project, are in Brisbane, but the company has a keen eye on future games in the Sydney and Melbourne markets.

“Our approach is very different from others in some ways,” Ponton said. The urban developer. “We provide a home and we follow a customer-focused approach.

▲ Arklife’s Scott Ponton and the Roberston Lane (left) and Cordelia Street projects.

“We don’t manage our buildings through a set of rules, we manage them culturally.

“We provide a level of service that our customers want. We don’t provide a level of service on things they don’t need.

“The company is really about design and technology in many ways, and it’s all about the customer. Everything we do is built around the four pillars that we believe the customer is looking for – and these are Health & Wellness, Community, Leadership & Career, and Culture & Events.

“Essentially, they’re in everything we do, and our buildings are both designed and managed that way. And so our engagement with our customers is quite strong, we’ve become quite friendly with them.

The seed of Arklife was planted in Ponton’s mind in the mid-2000s while working at Macquarie Bank, which was then looking to invest in the application of multifamily business models – such as build-to-let is known in the United States – for the Australian market.

But then the GFC struck and Ponton took on the role of head of business and development at Grocon.

One of the projects he worked on with the Melbourne-based developer was the Athletes’ Village for the Gold Coast 2018 Commonwealth Games with a view to its post-event conversion into the first large-scale build-to-let community of Australia, known as The Smith. Collective.

“Talking to some of the international capital providers, you know, made me think we were on the right track,” he says.

This was enough to convince Ponton to try to create a construction platform for rent himself, which he did with the support of other investors and ADCO, one of the largest builders- developers from Australia.

▲ Inside one of Arklife’s two current build-to-let projects in Brisbane, Roberston Lane.

But there was a hitch at the start.

The original name of the new platform – Liv – had also been registered around the same time by real estate giant Mirvac as a new build-to-let brand.

“We just had a gentlemen’s agreement when we both found out,” Ponton says. “I just said, ‘We don’t want to argue, it’s okay’…and that’s when Arklife was born around 2018.”

To date, the company has two build-to-let projects from scratch: Arklife Robertson Lane, an operational 89-unit apartment in the James Street area of ​​Brisbane city center in Fortitude Valley, and the Arklife Cordelia, a 265-unit apartment under construction in South Brisbane. and is expected to be completed in early 2024.

The first tenants moved into Arklife Robertson Lane in mid-October last year and the building was fully occupied by the first week of February this year.

Across town, Arklife Cordelia will incorporate benchmark sustainable design principles and the renovation of a heritage building built in the late 1800s as one of the city’s first boot factories.

It is a collaboration with the Clean Energy Finance Corporation and ADCO and was chosen as the first transaction for listed non-bank lender Qualitas’ billion dollar Build-to-Rent impact debt fund.

Meanwhile, plans for Arklife’s third building are well advanced.

Ponton is keeping details close to its chest except that it will include more than 300 apartments, but it is understood the company has its foothold at a site near JGL Properties’ recently completed 14-storey Jubilee Place office in Fortitude Valley.

▲ A rendering of Cordelia Street from Arklife.

“Our locations are typically urban locations, close to CBDs,” says Ponton.

“And what our research tells us is that while it’s good to be close to work, it’s not the predominant reason why people would live in one place over the other, they would much rather live close to where they left off.

“With Robertson Lane we actually marketed it for the first six weeks without a picture of the building as it wasn’t finished yet and we rented out 55% of the apartments – it was all about location and lifestyle .”

Another key aspect of the success of Arklife’s build-to-rent model is its focus on serving a target market. Of its mix of residents, about 66% are under the age of 35, 17% are from overseas or interstate, and 17% are families.

“We work a lot on our target market in terms of apartment layout, sizing, finishes and furnishings,” says Ponton. “And also, as you know, health and well-being are now an integral part of people’s lives. So the first thing we’re designing right now is the gym. »

In the well-established US market, he says, “pretty amazing things are happening” in terms of additional equipment in the asset class.

“On high-end buildings, there will be Michelin-starred restaurants just for residents…I don’t think you’ll see us doing that anytime soon.”

At last count, Australia’s booming build-to-let sector comprised 60 projects totaling 22,254 apartments with an estimated value of $13.6 billion. Only 6% of these projects are operational, 11% are under construction and 83% are still in the planning stage.

According to Ernst & Young forecasts, over the next decade the sector has the potential to grow rapidly to represent 10% of the country’s rental stock, equivalent to 375 projects totaling 350,000 apartments with an estimated value at $320 billion.

▲ Inside Arklife’s Roberston Lane in Brisbane’s Fortitude Valley.

Ponton says Australian build-to-let operators have taken “a very collegial approach” to developing the sector, especially given the critical shortage of rental stock.

“We all know each other. We all passed by other people’s buildings. There is room for everyone in some way.

“We certainly don’t see build-to-let taking over the rental market in Australia. But with the construction for sale we can see that it is part of the solution for the rental market, not the the solution.

“And we can see more institutional investment coming into Australia. But, again, it still has a long way to go before it dominates the incumbents in the market, that’s for sure. And that will take many years. – it’s just a drop in the ocean at this point.

He says tax regimes across the country are “still a bit of a drag” on the sector’s growth, but operators are hopeful this will be overcome in time.

“New South Wales has moved towards incentivizing build-to-let in terms of property tax exemptions. Queensland has yet to do so. I don’t know if they think about it, but it all helps.

Ponton confirms that Arklife is currently exploring beyond the borders of the Sunshine State to expand its portfolio and pipeline.

“We are looking in Melbourne and Sydney. So far we have found that the dynamics of supply and demand are more beneficial to us in Brisbane compared to other states.

“But we see the market changing. We are seeing a transition where more sites are coming to market due to conditions, environment and we are likely to see a bit more activity in Sydney and Melbourne over the next 12 months than what we have seen in the course of the last 12 months.

“In some ways, we kind of grew quite quickly and kind of under the radar.

“We just took care of it. And, you know, as the market evolves and grows, so will we.

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