Build-to-rent (BTR) is fast becoming one of the most talked about property asset classes in Australia. Below we breakdown why this emerging sector is attracting so much interest and why investors are lining up to get involved.
Firstly, it’s important to establish what BTR is defined as. BTR, sometimes described as multi-family housing, is a leading asset class overseas and accounts for one of the largest property asset classes in the United States, however in Australia it has only started to gain traction recently.
BTR apartment buildings are typically developed by a specialist platform, like Alt Living, which then retains ownership of the building once it’s complete. The apartments are rented out to tenants via a dedicated management platform, which is responsible for operating and maintaining the finished asset. Depending on the size of the BTR development, the developer secures backing from a capital partner such as an institutional investor or superannuation fund.
The BTR model is very different to the traditional build-to-sell model, where a property developer might build an apartment complex and then sell the units to individuals, who will either choose to live in them or rent them out as investment properties.
BTR developments offer several benefits to tenants, including more flexible lease arrangements, a variety of included amenities, the ability to customise their living space and the potential to also incorporate affordable housing into the mix.
Now that we have defined what BTR is, we can take a look at why the sector is gaining momentum. BTR is a long-established asset class in Europe and the United States, where the sector continues to grow and receive unprecedented levels of investment. Here in Australia, the sector is still relatively small, but looks set to grow in the years to come.
While past generations of Australians may have chased the dream of having a block in the suburbs with a backyard, our population is becoming increasingly urbanised, with the latest World Bank data showing that 86% of us now live in urban areas. As apartment living becomes increasingly popular in our nation’s capitals, the BTR model is emerging as a new player in residential real estate.
As Australia grapples with a divergence between house prices and household income, more people are renting – and for longer, creating a growing population of renters seeking a better rental experience.
Furthermore, we see institutionally owned rental apartments providing a critical source of housing supply in Australia and we’re seeing investment mandates being formed by institutional capital, specifically for BTR housing in Australia.
There are approximately 16,500 BTR apartments currently in the pipeline to be completed in Australia and we believe this number could grow to well in excess of 80,000 apartments over the next 7-10 years.
So where does Alt Living fit in? Alt Living is a specialist property platform focused on the burgeoning BTR sector in Australia. Alt Living develops, operates, and invests in purpose-built BTR assets, with the objective of building a network of thoughtfully designed and professionally managed properties across Australia.
Led by a team that is passionate about reimagining residential property and the resident experience, Alt Living has set out to provide housing to a diverse group of residents, create vibrant communities within our buildings and make a meaningful impact to the environment and society.
To find out more about Alt Living visit www.altliving.com.au.
Article written by Chrystan Paul, Chief Executive Officer of Alt Living. Chrystan is recognised as a thought-leader within the local co-living and BTR sector and is a regular speaker at industry events. Chrystan previously worked in the investment banking and funds management sector.
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