Owners of Wesfarmers Ltd (ASX: WES) shares can be excited about the company's latest plan to expand its business and unlock further earnings growth through residential apartments.
Wesfarmers is initially investing $100 million of equity into a joint venture to help deliver apartments that are cheaper and faster than traditional construction.
The Australian business already has a significant presence in the construction industry through its Bunnings, Tool Kit Depot and Beaumont Tiles. This "initial" move could become a larger initiative, according to Wesfarmers.
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Wesfarmers invests in affordable apartment construction
The Western Australian business announced it has entered into a 50:50 joint venture with Built Group to establish Built Living, which wants to deliver "residential apartments at scale through advanced manufacturing".
This will reportedly be Australia's first advanced manufacturing facility dedicated to medium and high-rise residential precast concrete construction and development.
Wesfarmers said Built Living will use 'design for manufacture and assembly' methods that are used in international markets. Its goal is to deliver apartments at approximately 20% lower costs and 50% faster than traditional construction.
Once the facility is complete in Western Australia, it expects to support delivery of more than 2,000 apartments annually once completed. Construction is expected to start in the second half of 2026.
Wesfarmers said its commitment will be staged, with additional facilities in other states to be considered.
It was also announced that the Western Australian Government is supporting this through a long-term lease of land in the Neerabup Automation and Robotics Precinct in Western Australia, together with "direct support" for the development of the facility.
A portion of the facility's annual capacity will be reserved for government-backed housing projects and the state's social infrastructure pipeline.
Wesfarmers also believes this will create growth opportunities for its existing businesses, including through supply arrangements with Bunnings' trade business on arm's length, commercially competitive terms.
Management commentary
The Wesfarmers managing director Rob Scott said:
Australia urgently needs more housing, and the Built Living joint venture is well positioned to address that need using internationally-proven construction models, to deliver high quality properties.
Built brings world-class construction experience, sophisticated digital processes and a strong track record of quality developments, while Wesfarmers contributes investment capacity and demonstrated capabilities in advanced manufacturing and supply chain management.
We look forward to working closely with Built and the Western Australian Government on what is a shared challenge. Addressing Australia's housing shortage will take real collaboration across industry and government, and we are pleased to be in a partnership that can help make a meaningful difference.
Wesfarmers share price snapshot
The Wesfarmers share price fell approximately 0.6% yesterday after this news was announced, though this decline also came amid an RBA rate hike concerning developments in the Middle East regarding a possible resumption of hostilities between the US and Iran.
