Build to rent (BTR), is one of the fastest growing commercial real estate sectors in Australia. Known elsewhere as multi-family residential, BTR assets are institutionally owned residential complexes; most commonly the developer will retain ownership for a period of between 7 and 10 years. Individual units in these complexes are rented to residents rather than being sold to individuals (to either rent or as an investment property), as in the more common build to sell (BTS) assets.
Although more established in markets such as the United States, Europe, and Japan, the BTR sector is gaining traction as residential property has traditionally not been an institutionally owned asset class in Australia.This is due to relatively low yields, and a market and taxation structure that favours capital gains. However, this is beginning to change as in recent years commercial investment yields have declined making those on BTR more attractive.
Additionally, BTR is viewed as an alternative to traditional commercial real estate for institutional investors, while also increasing housing market efficiency and providing an aggregate economic benefit to the country.
This paper endeavours to give a high-level summary of the BTR sector in Australia. It highlights key areas of the residential investment landscape, as well as potential synergies from a greater presence of BTR (and institutional investment), the challenges the sector faces, and the potential for the sector should these challenges be overcome.
The content includes:
- Residential Investment in Australia
- The Current BTR Landscape in Australia
- Obstacles to BTR in Australia
- Tax
- Cost
- Financing
- Growth Potential for BTR
