THE COMING AUSTRALIAN PHENOMENON: "BUILD TO RENT"


BUILD TO RENT SUMMARY

Build to Rent (BTR) has been a hot topic in global real estate circles for the last few years now but, in the grand scheme of things, it’s still a relatively new concept.

Unless you are directly involved in property development, you may have heard the term used in the media and wondered, What is Build to Rent and how does it work?

The growing global real estate phenomenon Build to Rent is creating unprecedented worldwide interest with private real estate funds, developers, industry superannuation funds, global Sovereign Funds, and Sovereign Pension Funds all declaring their interest in the new housing asset class.

In the UK an increasing number of projects have come to market in recent years so the UK Build to Rent is no longer restricted to industry insiders.

Build to Rent tenants appear to come in a variety of demographics.

According to The Times, university leavers and young professionals are being joined by older “tactical renters” who choose to rent for a variety of reasons.

Build to Rent may be a growing global phenomenon but it’s still very new in Australia.

The concept was first thrust into the spotlight as a part of the 2019 federal election campaign when Labour proposed taxation reforms for Build to Rent in Australia.

Since then, the term has started to become more reported in mainstream media in Australia. BTR is opposed to the common build-to-sell method, where a developer builds a residential development and sells the apartments to individuals to either live in or rent out as an investment.

Build to Rent is part of a growing institutionalised housing market and is particularly attractive for institutions, both local, international and sovereign funds that want reliable, steady income as well as exposure to the Australian residential property market.

Opportunities for sophisticated private investors (or family-office type investors) are more limited, and tend to be restricted to investing in property funds.

Investors wanting double-digit annual returns and/or “windfall” type gains would be well advised to try to get in - quickly and early - on the ground floor of the new asset class with private developers looking to enter this market.

Mostly minimum investment amounts in Australia would be around the A$500K region and would only be available to wholesale or professional investors by way of a  private placement.


ARTICLES/ PRESS:

St Regis Hotel Shelved as Mirvac Grows Build-to-Rent Portfolio

June 2020

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As Australia looks to construction to help rebuild the economy post-Covid-19, developer Mirvac continues to grow its Melbourne office and build-to-rent pipeline, revising plans for a $1 billion complex on the site of the former Melbourne Convention Centre.

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Oxford Lodges Build-to-Rent Plans for Pitt Street Skyscraper

June 2020

▲ Oxford Properties plans for its south building over station development on Pitt Street.

Oxford Properties has lodged a development application for a 39-storey, build-to-rent residential tower, the first of two towers for the Sydney Metro Pitt Street over-station development.

The project marks the first large scale build-to-rent residential tower for Sydney CBD, and will comprise 234 apartments.

Oxford Properties' Alec Harper says Australia’s evolving residential market, in response to housing affordability, population growth and changing sentiment to home ownership is driving demand for the emerging asset class in urban centres.

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"BTR Could recover quicker than any other property type, while offering a safe haven for investors."

June  2020 - It’s a case of hindsight in 2020 – thanks to income supplement schemes and social welfare, the rental income from multifamily/build-to-rent assets has been more stable than rental income from commercial/industrial assets. In this episode, we breakdown the build-to-rent market, discuss the impact COVID-19 has had on this asset class and how it could recover quicker than any other property type, while offering a safe haven for investors. CBRE PODCAST:

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Build-to-rent investors step up as apartment supply dwindles

July 2021 - A pause in apartment development is providing a kick-start to Australia’s emerging asset class

Nettleton Tribe designs Brisbane build-to-rent tower

July 2021 -  A 30-storey build-to-rent tower would be build atop a prominent ridgeline in Brisbane’s Bowen Hills, under a development application lodged with planning authorities

Sentinel’s Build to Rent is Australia’s first Carbon Neutral Certified apartment building

July 2021 -  Build to Rent project in Subiaco, Western Australia has become the first Carbon Neutral Certified apartment building in Australia under the Climate Active Carbon Neutral Standard for Buildings.

Latest news from the PDI: THE BUILD-TO-RENT MODEL IN AUSTRALIA

February, 2021- The homeownership aspiration has long been an unreachable dream for young Australians, but the launch of the Build to Rent (BTR) model is offering a fascinating alternative to the traditional housing market.

Slumping apartment pipeline creates opening for BTR

June 2021 - The pandemic that has slashed Australia’s new apartment pipeline gives this country an opportunity to kick-start build-to-rent in the same way the UK did when the GFC’s brake on private development drove the growth of the sector there, JLL says.

Council Backs Melbourne's Marvel Stadium $400m Build-to-Rent Project

June 2021 - Build-to-Rent developer Home has the green light for two build-to-rent towers next to Marvel Stadium after gaining unanimous support from the Future Melbourne Committee this week.

Blackstone Snaps Up Empty Apartment Tower for 100m For BTR in Brisbane

May 2021 - Blackstone, one of the largest private equity firms in the world, has snapped up a brand new but vacant apartment tower in Brisbane’s inner-city suburb of Kangaroo Point, with plans to convert it into a build-to-rent asset.

A Whole New Way To Rent

April 2021 - The folks at Frasers Property believe there’s a time in everyone’s life to really live. Which is why their new project in Brisbane’s Fortitude Valley is designed to treat renters like rock stars, in a location that’s all about living in the moment.

Greystar’s $1.3bn Build-to-Rent Bet

February 2021- US  build-to-rent specialist Greystar has secured its largest capital raising to date to support new projects being rolled out within Australia’s emerging build-to-rent sector.

The new $1.3 billion fund, Australia’s largest build-to-rent venture to-date, will aim to take advantage of shifting market trends, which has provided a catalyst in accelerating build-to-rent supply.

Is Build-to-Rent the next big thing in  property?

January, 2021 - It’s an often-misunderstood housing type, but it’s now being tipped as likely to be one of the biggest commercial asset hits of 2021.

Property Giants Enter Melbourne Build-to-Rent Market

 December 2020 - Canada’s Oxford Properties has struck its first build-to-rent deal in Melbourne, acquiring a 7,000sq m development site in Footscray.

Experts predict a build-to-rent revolution coming to Australia

December 2020 - The number of homes built explicitly to rent out is set to take off in Australia over the next 5 years...

Cromwell Wins Green Light for Docklands Skyscraper

December 2020 - Cromwell Property Group will push on with development at 700 Collins Street, after receiving approval for its mixed-use build-to-rent apartment, office and hotel tower in Melbourne’s Docklands precinct.

Build-to-Rent Should be A Third of Apartment Pipeline: Report

November 2020 - Increasing the number of build-to-rent apartments to 50,000 over five years, is the quickest solution to increase housing choice, according to a report by Allens and Urbis…

Vellum Funds Management is partnering with Urban Property Group to launch a $1 billion fund to develop build-to-rent properties

October 2020 - The companies this week launched The Places Build to Rent Fund, inviting investors to participate in a $132 million capital raising that has attracted $66 million in pre-commitments.

Australian Groups Move on $1 Billion Big Apple Build to Rent Market

22 September 2020- Developer Lendlease has partnered with Aware Super, the rebranded First State Super, to launch its first major urban regeneration project in New York.

The Australian groups, which have partnered previously on a residential projects across the US, have secured a prominent waterfront site in Brooklyn, and will now move ahead with plans for a $1 billion build-to-rent project.

Mirvac signals new era in housing choice with official opening of build to rent community LIV Indigo

19 August 2020- After leading Australia’s push into the build to rent sector, Mirvac today signalled a new era in housing choice with the official opening of LIV Indigo at Sydney Olympic Park, the first residential community in NSW designed and built exclusively for renters. 

Build-to-rent: The new model of property ownership promising more security and comfort

11 August, 2020 - There’s a long list of common rental gripes, from not being allowed to paint the walls to having to haggle about keeping pets or hanging paintings. And if the owner wants to move back in or sell the place? Start packing your boxes.

Tim Gurner, Melbourne lord mayor square off over build-to-rent

1 JunE, 2020 - Apartment developer Tim Gurner has slammed the emerging build-to-rent sector in Australia, calling it "economically stupid".

Mirvac pivot prompts build-to-rent boom

16 May, 2020- Diversified developer Mirvac is bolstering its Melbourne office and build-to-rent pipeline, submitting fresh plans for two large towers on a key city-grid corner site.

Australia’s build-to-rent is coming of age and it’s green

20 August 2020- NSW Minister for planning and public spaces Rob Stokes and Mirvac chief executive office & managing director Susan Lloyd-Hurwitz at the opening of Mirvac’s first build-to-rent development LIV Indigo at Sydney’s Olympic Park.

Building the case for build-to-rent

28 July, 2020- Build-to-rent rewards good design, can create jobs and elevate health and safety standards in a post-pandemic economy, says Stantec’s principal John Lucchetti.

Build-to-rent growth spurt ahead

11 August, 2020- A weight of capital is looking to enter Australia’s build-to-rent market, says Savills, as fresh research suggests BTR will follow the UK’s growth trajectory where 8,000 units were delivered over five years.

Build-to-Rent Property: The Future-Proof Home & Investment

3 August, 2020- Select Property Group Managing Director, Adam Price, looks at tenant priorities post-lockdown and why build-to-rent could now be in-demand more than ever. A chance to work out what they value most from a home. Build to Rent was already the strongest residential proposition in the UK.

Plenty of potential for build-to-rent but support needed.

A CBRE analysis showed that Australia ranks among the top five markets around the world with the best BTR potential when all the investment fundamentals were taken into account.

Australian Build-to-Rent Potential On Par With A$18bn UK Boom

New residential development sectors are gaining traction in Australia, with completed co-living units up by 46 per cent and build-to-rent up 38 per cent during the past 12 months.

Build-to-rent boost 

4 August, 2020- The NSW Government’s package of measures for the build-to-rent sector, including a 50 per cent land tax cut for 20 years, will boost supply and choice, says the Property Council.

Australian Super invests in affordable build-to-rent developer

3 August, 2020- Australia’s biggest super fund has invested in the evolving BTR sector which it says could help fill Australia’s critical affordable housing shortage.

Build-to-rent on the cusp of exponential growth

22 July, 2020- Australia's BTR sector has crossed a landmark threshold of 11,000 units during the past 12 months, with 10,000 more in due diligence, with investors favouring assets delivering reliable income streams amid the coronavirus pandemic, a CBRE report says.

Mirvac & Milieu collaborate in Build-to-Rent community

 July 2020- Mirvac and Milieu have announced Albert Fields, a one hectare Build-to-Rent urban precinct in Brunswick, Melbourne, scheduled for completion in late 2024 that will provide the flexibility of renting with the security typically associated with home ownership.

Lone Star And Quintain Seek £1B Partner For Wembley PRS

27 July 2020- Lone Star is looking to bring in a funding partner on a £1B slug of the Wembley Park private-rented residential scheme being built by Quintain, the developer it owns.

BTR Could Be Poised For A £1B Quarter

10 July 2020- The build-to-rent sector could be about to see a big spike in investment volumes, following a sharp drop brought about by the coronavirus pandemic. 

NSW Pioneers Build-to-Rent in Redfern

6 July, 2020 -  New South Wales will be the first state to fund a dedicated build-to-rent model, Minister for Social Housing Pru Goward revealed on Friday. The minister revealed that a Communities Plus housing site in Redfern would be home to the nation’s first ever build-to-rent housing model.

Build to Rent: what’s in a name? 

June 2020- We have a very long way to go with BTR in NZ, but, irrespective, the potential is certainly very exciting indeed JLL’s research team, based in Auckland, New Zealand.

Big Institution In Advanced Talks To Buy £850M Dolphin Square In PRS Megadeal

22 June 2020- French investment giant AXA Investment Managers - Real Assets is in advanced talks to buy the famous 1M SF Dolphin Square apartment block for around £850M, in what would be by far the largest ever deal for a single UK rented residential asset.

Australia's largest Superannuation funds move on Build to Rent

June 2020- More than two years in the making, the deal is a show of institutional confidence in the viability of the local build-to-rent sector-previously overlooked for the higher yields of commercial office or traditional build-to-sell markets.

NSW push to boost Build to Rent housing

8 June 2020- As tenants move into the first commercial development in Sydney, Australia this month, the New South Wales (NSW) government will consider land tax changes that encourage the fledgling Build to Rent.

Accelerating build-to-rent in Australia - Allens

If these challenges are addressed, build-to-rent assets can provide steady income for investors, improve housing affordability in Australia, and give tenants.

‘This Could Be BTR’s Moment To Make Its Case’

27 May 2020- You don’t really know how resilient a new sector is until it has been through a recession. In that sense, UK build to rent is undergoing trial by fire. The sector is well-positioned to outperform other areas of real estate, according to a panel of experts.

Mirvac buys build-to-rent site for $200m

Dec 24, 2019- Mirvac will continue its revolution of the apartment sector with plans to put up a build-to-rent apartment tower at the former Melbourne Convention Centre site in Spencer Street which it snapped up for $200 million on Christmas Eve. 

Accelerating Growth in Australia’s Build-to-Rent Market

Coinciding with shifts in international investment markets, a developing demographic profile and residential consumer sentiment have combined to enhance the prospects for the emergence of a build-to-rent sector in Australia.

It Is Not Developers Who Are Driving Quality In BTR, It Is Investors

20 September 2019- Although the UK’s build-to-rent sector is still considered to be in its infancy, it has grown rapidly across the country. In the first half of 2019, £1.4B of institutional investment poured into the sector, according to CBRE’s UK Residential Investment Marketview, which is 20% higher than H1 2018. Growth is expected to increase in pace even more over the next five years.

Grainger Update Highlights Resilience Of Rented Residential London

April, 2020- There is little data available to highlight how the nascent institutional private rented sector is faring in the face of the coronavirus. But a trading update by listed landlord Grainger indicates the sector is proving resilient so far, especially compared to other areas like retail and leisure.

BTR Investment Disappointed In 2019, But 2020 Is Off To A £1.5B Flyer

15 January 2020- Transaction volumes in the build-to-rent sector dropped 22% in 2019, according to new data, but 2020 is already off to a strong start.

Build to Rent | Ashurst

16 December 2019- Build-to-rent (BTR) is an innovative and exciting opportunity for the Australian property sector. It is no secret that the country's rental market demand is...

Build-to-rent (BTR) - an investment model to watch, South Africa

A Rare Glimpse At The Financials OF BTR Giant Quintain

23 October 2019- Just over four years ago, Lone Star paid a bit more than £1B for listed developer Quintain, and installed European co-head Angus Dodd as chief executive.

The Future Of BTR Goes Beyond City Centre Apartments, Say Investors

25 September 2019- Although the UK’s build-to-rent (BTR) sector is still considered new, it has already evolved. Both investor and societal pressures are pushing the model to adapt, to create the homes that customers want and to provide them in a way that suits our changing ways of living.

Cortland Continues UK BTR Expansion With LIV Group Buy

5 August 2019-U.S. investor and developer Cortland Partners has continued its assault on the UK build-to-rent market with the purchase of specialist operator and consultancy firm LIV Group.

Record Year So Far For BTR Investment

22 July 2019- Investment in the UK build-to-rent sector slowed in the second quarter of 2019, according to new data from CBRE. And yet, the first half still set a record for investment in the growing sector.

Can BTR Continue Its Record-Breaking Run?

10 June 2019- The build-to-rent sector is on a roll. The first quarter of this year saw a record £1B invested in the sector, according to CBRE, and a 34% increase in the number of units completed, according to Savills.