Research Briefing | Apr 26, 2022

Australian build-to-rent sector gathers steam

Australian Build To Rent Research BriefingAs a developing area in the residential space, the Australian build-to-rent (BTR) sector has a strong pipeline of mooted developments. Our project tracking currently captures approximately 25,000 announced units nationwide, with around 5,000 expected to break ground per annum in FY2022 and FY2023. This supply wave will come online from mid-decade. Tightening rental markets, support from state governments, and an influx of external financing are all combining to boost the burgeoning sector. The pattern of favourable public policy support is likely to continue, and we believe risk is weighted to the upside for unit rental growth. With BTR making up a growing proportion of apartment construction, this segment is anticipated to grow to over 10% of national new apartment supply by FY2025.

What you will learn:

  • Build-to-rent developments have struggled to gain traction in Australia, primarily due to uncompetitive rental yields – a result of the tax concessions meaningfully favouring owner-occupiers and household investors.

  • Amidst growing uncertainty, some developers who are seeking stable returns have forged ahead with BTR investments.

  • Inner-city rents have weakened during the pandemic, as border closures prevented the entry of temporary migrants, notably international students. As we move beyond the pandemic, rents are expected to play catch up. 

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