Australia's first high-rise residential tower built from timber is being built by property developers Lend-Lease near the water's edge in Melbourne's Docklands. The company says it will be the tallest such tower in the world – by more than two metres.

The Grollo family announced plans last year to build a timber high-rise at the old Carlton United Brewers site on Swanston Street but the Forte building at the west end of Bourke Street will be completed first. It will be Australia's most environmentally friendly multi-storey residence, with a 5-star green rating.

The $11 million Forte structure will house 23 boutique apartments and four townhouses and be built entirely from cross-laminated timber (CLT) sheets glued and pressed into layers. It will be completed in October after nine months' construction.

Lend-Lease chief executive Mark Menhinnitt said the panels were light but had a structural strength akin to concrete and steel, they needed less foundations and cut building times by as much as a third.

Mr Menhinnitt expects half the company's buildings to use the technology in the future. ''It's no good doing a building that's green that no one can afford,'' he said.