Hundreds tuned into Ray White Commercial’s (RWC) November Between the Lines webinar to hear experts discuss the evolving build-to-rent (BTR) sector in Australia.
Moderated by Ray White head of research Vanessa Rader, the panel featured RWC Western Sydney Director Victor Sheu and Coolamon Consulting Director Bennett Wulff, exploring how build-to-rent (BTR), an established asset class globally, remains in its early stages in Australia.
“BTR is a very mature asset class in some overseas markets, but it’s very much still emerging here in Australia,” said Mr Wulff. “Traditionally, if you’re renting in Australia, you’re renting from a mum-and-dad investor. There hasn’t really been the opportunity to have an institutional landlord.”
Mr Wulff explained that BTR gained recognition in 2021 with its inclusion in the State Environmental Planning Policy for housing diversity in New South Wales.
“What it essentially is, is large-scale, purpose-built rental accommodation with a minimum of 50 dwellings, held for a minimum of 15 years,” he said.
“It’s a separate asset class to affordable accommodation, student housing, and co-living. They’re all from the same family, but BTR is private market rental.”
Ms Rader highlighted the growing government interest in BTR, including subsidies and tax breaks for offshore investment, amidst Australia’s housing crisis and asked Mr Sheu whether BTR was gaining traction as an asset class among his clients.
“BTR has been in the discussion over the last couple of years, and it’s being assessed as one of the angles when people are looking at land and its highest and best use,” said Mr Sheu.
“But when it comes to developers or delivery partners for these major institutions, they have a very specific mandate that they’re looking for to fulfil their pipeline.”
Despite this growing interest, Mr Sheu pointed out the challenges. “BTR takes up less than one per cent of our total housing supply,” he said.
He also noted that, given the scale required for BTR projects, many developers revert to build-to-sell models.
“At that scale point, if the project is well positioned enough, which is one of the requirements for BTR, people will just run build-to-sell because that’s what people are used to, that’s what funders are used to, and that’s what banks are used to.”
Mr Wulff also discussed the progress made in addressing barriers to BTR development. “In 2021, we sort of had a watershed moment when BTR became its own thing and got its own definition,” he said.
He noted that the New South Wales government has been supportive, enabling BTR developments in certain zonings where build-to-sell projects are not permitted.
“There are certainly efforts being made to unlock BTR,” said Mr Wulff.
While the market remains small, the discussion highlighted the potential of BTR as a growing segment in Australia’s property landscape, with both challenges and opportunities ahead.
