As Australia faces a significant housing crisis, international property firms and superannuation funds are investing heavily in local builders and developments, aiming to profit from the ongoing construction boom. These investments from entities in Japan, Southeast Asia, the United States, Canada, and the United Arab Emirates could potentially lower home prices and rental rates for Victorians. However, prominent figures within the building industry caution that this influx of capital may drive some companies out of business.
This week, Metricon, the largest builder in Victoria and across the nation, disclosed its plans to finalize a $115 million agreement, which will make it 51% owned by Japan’s Sumitomo Forestry Group.
Acquisition Trends
Sumitomo, which also owns Henley Properties Group (the seventh-largest builder in Victoria) and Wisdom Homes in New South Wales, along with the Scott Parker Group in Western Australia, has been acquiring Australian companies since 2008. This shift will result in Australia’s largest builder being primarily based in Japan, with offshore entities responsible for constructing approximately 12% of the country’s new homes.
NXT Group, Australia’s second-largest builder, is already owned by Japanese corporation Asahi Kasei and holds an approximately 11% stake in the fifth-largest builder, Simonds Group.
International developers are increasingly influencing Melbourne’s skyline; three of the city’s four tallest towers were constructed by foreign firms, with more developments planned.
Industry Insights
Brad Duggan, CEO of Metricon, confirmed that the acquisition by Sumitomo is underway. Experts in the housing sector suggest that ambitious state and federal housing targets—aiming to introduce hundreds of thousands of homes to local suburbs—are enticing international giants to invest in the Australian market. Achieving these targets may require substantial foreign financing.
Tim Reardon, Chief Economist at the Housing Industry Association, noted a rise in offshore ownership of Australian building firms since the global financial crisis, emphasizing the need for further international involvement to meet housing goals. He expressed concern over state governments’ policies that have effectively taxed foreign investors out of the market.
Reardon highlighted that increased foreign ownership among major builders could lead to improved supply chain efficiencies through vertical integration, ultimately benefiting homebuyers by facilitating faster housing construction.
Challenges for Smaller Builders
Phil Dwyer, National President of the Builders Collective of Australia, warned that the involvement of large international firms would create competitive challenges for smaller builders, often referred to as “mum and dad” operators. These larger companies enjoy significant purchasing power for materials, making it increasingly difficult for smaller enterprises to compete. Dwyer noted that many smaller builders have struggled to remain viable over the past decade, with a growing number exiting the market entirely.
Melbourne’s skyline is dominated by international developers; notable projects include Australia 108, developed by Singapore’s Aspial Corporation, and Aurora Melbourne Central, created by UEM Sunrise from Malaysia. Hong Kong-based Far East Consortium is behind West Side Place, while Beulah International, backed by Malaysian interests, is developing the city’s future tallest skyscraper, STHBNK.
The burgeoning build-to-rent market in Melbourne is also attracting significant international investment, as developers cater to the growing population of tenants seeking long-term rentals. Major players such as American real estate firm Blackstone own the 437-apartment Caulfield Village complex, while Canadian pension fund Oxford Properties has financed a $180 million development in Southbank, which is exclusively for tenants.
Additional international investors in Melbourne’s build-to-rent market include Singapore’s GIC sovereign wealth fund, American Sentinel Real Estate, and the Abu Dhabi Investment Authority, which invests on behalf of the UAE government.
Future Prospects
Richard Temlett, National Executive Director of Charter Keck Cramer Research, pointed out that Australia’s goal of constructing 1.2 million homes within the next five years, coupled with Victoria’s target of 800,000 new homes over the next decade, presents strong incentives for foreign investment.
Temlett stated, “Australia is a very attractive country, and these foreign firms play a crucial role; we need to embrace that international capital.”
Global Giants Engaging in Australia’s Building Boom:
Sumitomo Forestry (Japan)
Company value: $13.727 billion (AUD)
Currently engaged in a $115 million bid for a 51% stake in Metricon.
Acquired Henley Homes (Victoria) in 2009, Wisdom Homes (NSW) in 2016, and Scott Park Group (WA) in 2020.
Increased ownership of Henley Homes (Vic) in 2020.
Asahi Kasei Group (Japan)
Company value: $14.89 billion
Acquired NXT Building Group (NSW’s largest builder) in 2021 and Arden Homes (via NXT) in 2023.
Holds 10.8% of Simonds Group as of 2024.
Daiwa House (Japan)
Company value: $29.847 billion
Acquired a majority stake in the Melbourne Quarter build-to-rent project for $650 million in 2023.
Purchased Rawson Group (NSW) in 2017.
Blackstone (America)
Company value: $184.68 billion
Developed the Caulfield Village build-to-rent complex in 2022 and the Kangaroo Point (Brisbane) build-to-rent complex in 2021.
GIC (Singapore – Sovereign Wealth Fund)
Estimated value: $770 billion
Supports the build-to-rent firm Home with developments in Richmond, Southbank, and other areas.
Backed Gurner development firm with $400 million in 2022.
Abu Dhabi Investment Authority (ADIA) (UAE – Government Investor)
Estimated value: $1.5 billion
Partners with Qualitas property investment funds, collaborating with Melbourne developer Gurner on various build-to-rent projects across Australia.
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