Two Australia cities – Melbourne and Sydney – are tipped for a Build to Rent boom, says Assael Architecture – a British architecture which has designed many key UK Build to Rent projects backed by large institutions such as L&G, Grainger and Essential Living.
Over the next 12 months, more than 30 major Build to Rent projects – totalling 11,667 homes – have been confirmed in Australia. This figure is likely to increase, especially given post-Covid there is expected to be a more significant decline in build to sell apartment construction levels, and the Government will be more willing to incentivise Build to Rent to sustain construction activity.
New South Wales and Victoria State Governments both announced recently that they would provide measures to encourage both domestic and offshore investment in Build to Rent, and Assael Architecture and JLL expect other state governments to follow suit.
“The challenges of 2020 have, if anything, fuelled international appetite for the sector across Australasia, largely driven by the resilience of the sector in the more mature global markets and the investment performance of operational assets. All the signs indicate an exciting future for this emerging asset class in Australia and New Zealand that could be key to helping solve the housing crisis and provide investors with predictable long-term returns in the process.
“Ministers in both Australia and New Zealand are increasingly prepared to consider what this emerging asset class could offer. They are particularly interested in its potential role in being a major contributor to the economic recovery following the Covid-19 global pandemic.”Paul Winstanley, Head of Build to Rent for Australia & New Zealand, JLL
Like Brits, Australians have historically placed a high value on owning their own home – but attitudes are changing. The Australian Bureau of Statistics found homeownership fell from 70% in 1998 to 66% in 2019 – the lowest level since 1994.
As urban professionals rent for longer, they want flexible and well-designed homes with serviced operations that are available for rent. Sydney and Melbourne are likely to be at the epicentre of an Australian Build to Rent boom, with each ranked the third and fourth least affordable cities to live in globally respectively.
Melbourne is the largest market, currently accounting for more than 50% of Australia’s Build to Rent market. This is partly because it’s easier to acquire development sites than in pricier Sydney, which accounts for a quarter.
A JLL report said that the UK was the best market for Australia to learn from – as the fundamentals and point they are starting from were similar, and that Australia could “learn from the successes and previous inefficiencies” that the UK had experienced.
“At Assael, we have worked with major institutional and private investors such as L&G at Blackhorse Mills, Essential Living at Union Wharf and Connected Living London (Grainger plc & TFL).
“We know that investing time in researching and developing the product itself is key if you want to attract the core audience of future renters – whether discerning young professionals or increasingly time-poor families that require services and flexibility. They are paying for the experience of living in a Build to Rent community, so getting the quality right is important – particularly when it comes to communal spaces.”Loren Thanyakittikul, Director, Assael