Regional Australia is a potentially untapped opportunity for build-to-rent developers, according to a recent CBRE research report.
Backed by lower construction costs and population shifts, the report highlights global examples of BTR’s success in regional areas driven by consumer demand.
CBRE Australia head of residential research Craig Godber noted the global precedents coupled with feasibility benefits and demand could help spur regional build-to-rent developers.
“At this early stage of the sector’s evolution in Australia, it can be difficult to make a highly amenitised city centre BTR project stack up,” he said.
“The success of regional projects in the US and the UK, where BTR-style product is well established, is another consideration – highlighting the potential for build-to-rent in markets with a high enough proportion of renter households.”
The CBRE report is the first in a three-part BTR series, highlighting the fast-growing pipeline of BTR development activity in Australia. Despite some challenges and barriers, the first purpose-built buildings are now operating as stabilised assets.
“In the regions, lower land costs and lower densities help to reduce overall construction cost and can mitigate some of the issues that city centre developers are facing,” he said.
Most BTR developments have been completed in Melbourne, Sydney, and Brisbane’s inner-city areas or population growth corridors.
“However, developers are facing a series of challenges, including high land values, a lack of suitable land and strong competition for prime sites.” he said.
CBRE’s report also notes that population trends and working from home patterns could also play a role in the sector’s regional growth prospects in Australia. Mr Goodber noted that the September quarter of 2020 was the third successive quarter of record net movement to regional Australia.
“There has been a notable rise in the movement of people away from the capital cities, with September quarter 2020 data showing the greatest movement of residents from capital cities to regional locations on record. The December quarter saw this trend maintained,” he said.