Inside Build-To-Rent
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Inside Build-To-Rent

The Australian uptake of the ‘new’ development platform remains dwarfed by overseas expansion — but things are moving.

By Terry Christodoulou
Thu, Jul 8, 2021 2:23pmGrey Clock 2 min
Build-To-Rent is a relatively nascent residential living market — one that is quickly moving beyond an ‘emerging’ tag as it spreads out across Australia. 
To understand the platform is to comprehend that where standard development equates to the construction of residences to be sold on completion, BTR developments are held, operated and rented by the developer. 
While the premise is straightforward it does present with a number of issues — among them land tax discounts and premium land transfer tax, alongside funding and consumer uptake issues that have caused it to stutter in its national rollout. 
Where the BTR industry in Australia continues to find its footing as a fresh consideration, BTR has been delivered and engaged in US markets for the best part of 40 years. Elsewhere, European markets such as London — which has expanded rapidly in alignment with federal government support since 2013 — has around 28,000 BTR properties completed, 16,000 under construction and 38,000 in planning, according to Statista research. 
Local experts such as Craig Godber, CBRE’s Associate Director, Head of Residential and Build-To-Rent Research Australia indicates that local trepidation may be more a case of ‘seeing is believing’ amongst prospective consumers. 
“I think that Australians have always partly accepted that there’s either owning a home or private renting, and it’ll take a few successful projects before a gradual uptake by renters is made,” said Godber. 
Where BTR differs from traditional renting is in its want to retain renters across extended periods and through a number of additional services such as dedicated concierge services, mail rooms, meeting rooms and mixed-use office spaces. 
Further, with one central controlling body overseeing each building operation, BTR offers flexible long-term tenancies, client-centric onsite management as well as appealing allowances in rewards to personalisation (painting and decorating) and pets. 
The caveat is that more lifestyle services means increased outlay. 
“There is the expectation that rents in BTR developments will be higher as opposed to the private market, and that may take some time for the consumer adjust to,” added Godber. 
The premium services offered by BTR have dispelled early market fears about it being rebranded social housing.
“That perception existed early on, particularly as the developments are purpose built, but as people and investors continue to learn about it that stigma fades away.”
Godber is increasingly optimistic about the future, buoyed by with a number of projects by renowned operators Mirvac and Grocon and an expansive market being further fed by various overseas developers. 

Sydney and Melbourne remain key with the Victorian capital outpacing the northern city’s pipeline by almost double, according to research from Knight Frank. 

The number of BTR apartments in Melbourne’s planning currently sits at 6000, well ahead of Sydney’s 3300 and Brisbane’s 1600.

11.1% of development sites purchased in 2020 in Melbourne were earmarked for high-density, BTR projects while in Sydney that figure was 0.7%.

Despite the recent interest and development proposals in the pipeline uptake is still expected to be rather gradual when compared to the recent explosions in popularity of BTR in Europe. 
Godber indicates that further government assistance and incentive, aligned to increased interest at an institutional investor level will help BTR continue to grow across Australia. 
“Financial models, the combination of better taxation and the structuring of funds as institutional investment vehicles for build-to-rent are all essential to seeing the sector continue to grow.”


Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’

Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual

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RBA Governor explains the rate rises we had to have

Philip Lowe’s comments come amid property industry concerns about pressures on mortgage holders and rising rents

Wed, Jun 7, 2023 2 min

Leaders in Australia’s property industry are calling on the RBA to hit the pause button on further interest rate rises following yesterday’s announcement to raise the cash rate to 4.1 percent.

CEO of the REINSW, Tim McKibbin, said it was time to let the 12 interest rate rises since May last year take effect.

“The REINSW would like to see the RBA hit pause and allow the 12 rate rises to date work their way through the economy. Property prices have rebounded because of supply and demand. I think that will continue with the rate rise,” said Mr McKibbin.  

The Real Estate Institute of Australia  today released its Housing Affordability Report for the March 2023 quarter which showed that in NSW, the proportion of family income required to meet the average loan repayments has risen to 55 percent, up from 44.5 percent a year ago.

Chief economist at Ray White, Nerida Conisbee, said while this latest increase would probably not push Australia into a recession, it had major implications for the housing market and the needs of ordinary Australians.

“As more countries head into recession, at this point, it does look like the RBA’s “narrow path” will get us through while taming inflation,” she said. 

“In the meantime however, it is creating a headache for renters, buyers and new housing supply that is going to take many years to resolve. 

“And every interest rate rise is extending that pain.”

In a speech to guests at Morgan Stanley’s Australia Summit released today, Governor Philip Lowe addressed the RBA board’s ‘narrow path’ approach, navigating continued economic growth while pushing inflation from its current level of 6.8 percent down to a more acceptable level of 2 to 3 percent.

“It is still possible to navigate this path and our ambition is to do so,” Mr Lowe said. “But it is a narrow path and likely to be a bumpy one, with risks on both sides.”

However, he said the alternative is persistent high inflation, which would do the national economy more damage in the longer term.

“If inflation stays high for too long, it will become ingrained in people’s expectations and high inflation will then be self-perpetuating,” he said. “As the historical experiences shows, the inevitable result of this would be even higher interest rates and, at some point, a larger increase in unemployment to get rid of the ingrained inflation. 

“The Board’s priority is to do what it can to avoid this.”

While acknowledging that another rate rise would adversely affect many households, Mr Lowe said it was unavoidable if inflation was to be tamed.

“It is certainly true that if the Board had not lifted interest rates as it has done, some households would have avoided, for a short period, the financial pressures that come with higher mortgage rates,” he said. 

“But this short-term gain would have been at a much higher medium-term cost. If we had not tightened monetary policy, the cost of living would be higher for longer. This would hurt all Australians and the functioning of our economy and would ultimately require even higher interest rates to bring inflation back down. 

“So, as difficult as it is, the rise in interest rates is necessary to bring inflation back to target in a reasonable timeframe.”


Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’

Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual

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