Australia’s build-to-rent (BTR) market is expected to grow from 1,859 homes today to nearly 16,000 by 2027 based on existing projects alone, according to new Cushman & Wakefield research.
The research found that 14 institutional investors were currently developing 12,848 units across 40 BTR projects nationwide – worth a combined $9.6 billion.
“Build-to-rent in Australia has reached a turning point,” Cushman & Wakefield Director, Metropolitan Markets Marcus Neill said.
“The number of constructed units is set to double each year to 2025 and grow nearly tenfold over the next five years.
“Victoria is currently the epicentre of build-to-rent, and we expect it to play a key role in absorbing fundamental housing issues.”
The number of active groups in the BTR market has jumped from 12 to 35 since 2020, with new developments expected to add significantly to the construction pipeline.
Victoria is expected to develop the lion’s share of units and host almost two-thirds of national stock within the next decade.
The state currently has one completed project, Home Southbank at 256 City Road, which began operating at the beginning of May this year.
Less than 2,000 units now exist across five projects in Queensland, Western Australia, and New South Wales.
Cushman & Wakefield analysis suggests that Australia’s population growth will support demand for at least 300,000 rental units by 2029, which will positively impact the BTR market.
However, there are obstacles including a lack of federal tax concessions, rising construction and land costs, and a lack of financing transactions occurring to date.
Cushman & Wakefield Head of Metropolitan Markets Lukas Byrns said they had witnessed a dramatic influx of investment into the BTR sector since 2020 and a sharp increase in active groups.
“They are typically backed by both domestic and foreign capital and aiming to develop portfolios of up to 5,000 units over the next 5 to 7 years,” Byrns said.
Cushman & Wakefield Research Manager, NSW Sean Ellison said that macroeconomic forces were supporting the BTR market, with growth likely to continue as housing affordability remained an issue.
“It is unlikely that the current supply of Australian housing will absorb forecast demand, pushing rents higher,” Ellison said.
“Population growth supporting tenant demand, higher rents increasing investor returns, and a significant amount of capital targeting Australian housing are all tailwinds for build-to-rent over the next decade.”
Major existing developments either under construction or in planning in Victoria include:
- Assemble building nine projects encompassing 3,660 units
- LIV Mirvac’s three projects providing 1,500 units
- HOME providing 1,600 units
- Greystar with 1,300 units
- Investa and Oxford Indi with 1,100 units
- Further major projects secured by Gurner, Altis, Blackstone, Sentinel, Live Local, Hines, Samma Property Group, Novus and Alt Living.