The US has the most advanced build-to-rent market in the world with 21 million residences.
“If you look at the US it’s the largest property asset class, larger than office, industrial, or retail,” Consibee said.
“So it’s seen as a good investment with stable returns. But in Australia we have a problem that yields are very low. We have a problem getting yields to stack up,” she notes.
Due to the United Kingdom being a relative newcomer to the game, with 30,000 existing units, the CBRE report uses the UK’s market as a guide, with the mix of build-to-rent renters, including:
Younger independents aged 18-24: 22 per cent.
Flexible professionals, no children aged 25-44: 26 per cent
Budgeting families aged 25-44: 29 per cent.
Reconciled with renting aged 45 and upward: 23 per cent.
Implementing BtR across Australia and New Zealand
While the build-to-rent is still in its infancy in Australia, Consibee says it’s not going to be a strong growth sector until government incentives improve.
“Improve in the same way they are available in the US and the UK, or alternatively until rental returns start to improve, which again, doesn’t seem like it will happen anytime soon particularly in Melbourne and Sydney,” she said.
Teo says a key driver of build-to-rent take-up in the Pacific would be professional management, which he likened to a hotel or student accommodation, where the tenant was the customer and the focus of the operator was to increase retention.
“Developers also need to be cognisant that different products appealed to entirely separate demographic and socio-economic niches.”
Another driver of sector growth in the Pacific region is competitive rental markets in metropolitan cities like Sydney, which often require renters to attend multiple inspections for often sub-standard accommodation.
“In the US and the UK, large-scale build-to-rent providers allow renters to drop into a leasing suite, talk to an agent or do an online virtual tour of various apartment styles,” Martin-Henry said.