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30/09/2024
Koichiro (Ko) Obu
Head of Real Estate Research, Asia Pacific
Matthew Persson
Property Market Research
The composition of the Australian residential market creates a unique opportunity to build scale within the Build-To-Rent (BTR) sector. There is an estimated 11 million dwelling within the residential market[1], 70% are classified as houses, 16% apartments and 13% a mix of Semi-detached, Terrace and Town houses[2]. This is very different to markets such as Japan where apartments account for a larger portion of total stock. In Australia, the rental market is largely held by private retail investors with institutional BTR reflecting 0.2% of the total rental supply[3]. Globally, rental markets such as the UK have seen institutional BTR penetration rates increase from 0.1% to 2.0% over the past decade[4], demonstrating a significant growth opportunity for the Australian market.
In Australia, institutional BTR is charactered by apartment style product, with typically between 100-500 tenancies per asset. We believe BTR has numerous competitive advantages over the private rental market. In the private market, apartment rentals typically start off as Build-To-Sell developments, let by a private landlord and managed through a strata committee. For the tenant there is an element of uncertainty with duration of occupancy and maintenance of the property largely up to the discretion of the landlord. BTR assets provide an institutionally managed product for the sole purpose of long-term tenure. Assets are designed through a ‘customer centric’ approach which typically see a greater degree of amenity such as co-working spaces, gyms, and other communal facilities. Increased amenity, professional management and overall tenancy security generally warrant a rental premium of 10-15% compared to the private rental market.[5]
Housing market update CoreLogic June 24
Housing Census as of 2021
Franklin Street as of September 24
Office for National Statistics UK as of 2022 & UK BTR Market Update Savills as of Q2 2024
DWS Research as of September 24
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