The new Australian housing model investors can’t get enough of
Savvy high net worth players from Australia and Asia are getting on board as the residential landscape shifts
3 min
Build-to-rent (BTR) residential property has emerged as one of the key sectors of interest among institutional and private high-net-worth investors across the Asia-Pacific region, according to a new report from CBRE. In a survey of 500 investors, BTR recorded the strongest uptick in interest, particularly among investors targeting value-added strategies to achieve double-digit returns.
CBRE said the residential investment sector is set to attract more capital this year, with investors in Japan, Australia and mainland China the primary markets of focus for BTR development. BTR is different from regular apartment developments because the developer or investor–owner retains the entire building for long-term rental income. Knight Frank forecasts that by 2030, about 55,000 dedicated BTR apartments will have been completed in Australia.
Knight Frank says BTR is a proven model in overseas markets and Australia is now following suit.
“Investors are gravitating toward the residential sector because of the perception that it offers the ability to adjust rental income streams more quickly than other sectors in response to high inflation,” Knight Frank explained in a BTR report published in September 2023.
The report shows Melbourne has the most BTR apartments under construction, followed by Sydney. Most of them are one and two-bedroom apartments. The BTR sector is also growing in Canberra and Perth where land costs less and apartment rental yields are among the highest in the country at 5.1 percent and 6.1 percent, respectively, according to the latest CoreLogic data.
In BTR developments, there is typically a strong lifestyle emphasis to encourage renters to stay as long as possible. Developments often have proactive maintenance programs, concierges, add-on cleaning services for tenants, and amenities such as a gym, pool, yoga room, cinema, communal working spaces and outdoor barbecue and dining areas.
Some blocks allow tenants to switch apartments as their space needs change, many are pet-friendly and some even run social events for residents. However, such amenities and services can result in BTR properties being expensive to rent. Some developers and investors have been given subsidies to reserve a portion of BTR apartments as ‘affordable homes’ for local essential services workers.
Ray White chief economist Nerida Conisbee says Australian BTR is a long way behind the United States, where five percent of the country’s rental supply is owned by large companies. She says BTR is Australia’s “best bet” to raise rental supply amid today’s chronic shortage that has seen vacancy rates drop below 1% nationwide and rents skyrocket 40% over the past four years.
Ms Conisbee says 84 percent of Australian rental homes are owned by private landlords, typically mum and dad investors, and nine percent are owned by governments. “With Australia currently in the midst of a rental crisis, the question of who provides rental properties needs to be considered,” Ms Conisbee said. “We have relied heavily on private landlords for almost all our rental properties but we may not be able to so readily in the future.” She points out that large companies can access and manage debt more easily than private landlords when interest rates are high.
The CBRE report shows that Asia-Pacific investors are also interested in other types of residential properties. These include student accommodation, particularly in high migration markets like Australia, and retirement communities in markets with ageing populations, such as Japan and Korea. Most Asia Pacific investors said they intended to increase or keep their real estate allocations the same this year, with more than 50 percent of Australian respondents intending to invest more.
A record-breaking $11 million sale at The Centennial Collection has set a new benchmark for luxury apartment living in Bondi Junction.
As interest rates, inflation and market sentiment fluctuate, investors are being urged to focus on data, not panic.
Australia’s housing affordability crisis is being fuelled by chronic undersupply, planning delays and rising development costs, as politicians continue to focus on the wrong solutions.
3 min
Australia’s housing crisis will not be solved by first-home buyer incentives or tax changes alone, with leading property figures warning governments must tackle supply constraints if affordability is to improve.
Speaking at the Kanebridge Quarterly Property Leadership Summit in Sydney last week, expert project marketing specialist Sam Elbanna, property investor and fund manager Paul Miron and property consultant Karla McNeice said that a lack of housing supply remained the central issue facing the market.
Elbanna, Director of CPM Realty with more than 30 years’ experience in project sales, argued that successive governments had focused too heavily on stimulating demand rather than addressing the barriers preventing new housing from being delivered.
“The misconception is that politicians think the way to solve the housing crisis is to drive demand,” he said.
“The reality is that’s not the way. This is a supply-side problem, and it needs to be solved on the supply side.”
Drawing on his experience in project sales, Elbanna said policies designed to help first-home buyers often had unintended consequences, pointing to previous grants that ultimately flowed through to higher property prices.
Instead, he said developers were facing increasing red tape, approval delays and rising costs, which were discouraging new housing supply.
“In the absence of stock, demand exceeds supply,” he said.
Miron, a Co-Founder and Fund Manager of Msquared Capital, said the housing debate had become overly focused on tax policy while overlooking broader structural issues.
He argued that affordability challenges stemmed from a combination of factors, including planning constraints, supply shortages, migration levels and interest rates.
“No-one can be 100 per cent certain on the real reason for property prices is going up,” he said.
“The reason why property prices are higher is a combination of interest rates, lack of supply, migration, vacancy rates and maybe taxes play a role.”
Miron was critical of recent federal housing policy changes, warning they could reduce the number of new homes being built and further constrain supply that was even highlighted in the budget.
He also highlighted the importance of the property sector to the broader economy, noting that residential real estate and related industries employed more than one million Australians.
McNeice, who advises developers on sales strategy and market intelligence, said understanding buyers had become increasingly important as affordability pressures intensified.
While affordability remained a major consideration, she said today’s buyers were focused on value rather than simply price.
“People are looking for value for money,” she said.
She said buyers were increasingly evaluating factors such as transport connections, walkability, nearby amenities and flexible living spaces that could accommodate changing family needs.
“What infrastructure is going on? Can I walk to the shops? Can I meet people at the local cafe?” she said.
The panel also discussed the mounting pressures facing developers, with Elbanna arguing that many projects become financially unviable from the moment a site is purchased.
“The viability of a development happens at the moment the site is bought,” he said.
He said rising construction costs, higher interest rates and overly optimistic feasibility assumptions had left some developers exposed as market conditions changed.
While acknowledging the growing number of smaller and first-time developers entering the market, Elbanna said property development required expertise across finance, construction, marketing and legal disciplines.
“It is actually a business that requires a level of expertise,” he said.
Looking ahead, the panel agreed opportunities remained in the market despite current challenges.
Miron said property should continue to be viewed as a long-term investment and cautioned against trying to time short-term market movements.
McNeice said success would increasingly depend on identifying projects that genuinely met changing buyer expectations.
Elbanna said affordable housing remained achievable, but developers needed to deliver more than just homes.
“We can provide affordable housing in this country,” he said.
“But we’ve got to wrap that affordable housing with the things that people want.”
As Australia’s housing affordability debate intensifies, the panellists agreed on one point: without a meaningful increase in housing supply, demand-side measures alone are unlikely to solve the nation’s property challenges.
Odd Culture Group brings a new kind of after-dark energy to the CBD, where daiquiris, disco and design collide beneath the city streets.
A&K Sanctuary unveils Kitirua Plains Lodge, a sustainability-focused luxury property shaped by landscape, local craft and contemporary safari architecture.
