Build-to-Rent Building Momentum

Over the past couple of days, I was fortunate enough to attend and speak at a conference on build-to-rent (BTR) where the great and good of the sector had gathered. We had overseas specialists, developers, lawyers, investors, advisers, lenders and a whole host of others in attendance, and I was struck by just how far we have come as an industry navigating the emerging sector.

A little over two years ago, we started our BTR journey here at CBRE Australia with a host of meetings. We went out to the industry to discuss its merits and inform our clients that we were taking an active interest in the sector. Progression was sluggish as traditionally this asset class has been met with a healthy dose of scepticism by institutional capital. However, fast-forward two years and I am amazed at the number of conversations we have with investors, developers and financiers alike who are actively pursuing interests in the nascent BTR sector.

Australia’s closest peer with regards to the maturity of the BTR sector is the United Kingdom, which overcame a number of similar hurdles that has enabled the sector to get off the ground. Listening to specialists in the UK inform us that they are similarly excited by the progress we have made in the sector is very encouraging. Property often feels like a slow-burn, so it was good to get positive affirmation that not only are we progressing, but that we are much more advanced than the UK was at a similar point in their journey.

A lot of the discussion over the course of the conference centred around the current hurdles faced by the sector, in particular, financial and planning challenges. What was encouraging though, was that despite these issues, quite a few developers have secured investment partners and financial backing, and are forging ahead with their plans. This is very good news for the sector because the general consensus among experts in the room was that once these projects are up and running, the interest by both tenants and investors will increase dramatically.

How to pave the way for successful BTR projects was a key focus of both the panel sessions, as well as discussions with attendees. What I took from this was that investors have done a lot of work in trying to understand how to not only attract but also retain tenants - or as we should refer to them, customers. Regardless of your cost of land, cost of debt, etc. ultimately, if projects don’t meet customer requirements then they will struggle to thrive. Creating a sense of community was identified as a priority in BTR developments as customers are more likely to stay long-term if they have formed meaningful relationships with their neighbours and the surrounding community.

In the end, the main goal for all investors is to turn a profit, but if a by-product of this is enhancing the fabric of society then the country is all the better for the emergence of this sector into the mainstream.

For more information on BTR, please read CBRE's latest Market Outlook report and BTR report: