I HAVE NOT HEARD MUCH ABOUT BUILD TO RENT BEFORE?

CITYLIFE INTERNATIONAL

In the United Kingdom, Build to Rent (known as the Private Rented Sector (PRS)) has grown steadily over the past decade from a largely standing start and is now the second largest form of tenure in the UK.

Trends that have emerged in London, where the costs of home ownership are high and work and leisure opportunities are largely centralised in inner-city areas, may gain momentum in the Melbourne and Sydney housing markets.

Build to Rent housing has also long been an established asset class in the United States (known as multi-family).

Build to Rent may be a growing global phenomenon but it’s still very new in Australia. The concept was thrust into the spotlight in 2019 as a part of the 2019 federal election campaign when Labor proposed taxation reforms for build to rent in Australia.

Since then, the term has started to become more reported in mainstream media in Australia, with private real estate funds, developers, industry superannuation funds, global Sovereign Funds and Sovereign Pension Funds all declaring their interest in the new housing asset class.

The UK has recently given build-to-rent formal policy recognition, defining it as: Purpose built housing that is typically 100% rented out. It can form part of a wider multi-tenure development comprising either flats or houses.

This can be contrasted by the recently announced Australian Government initiative which seeks to promote housing affordability by allowing managed investment trust (MIT) status for eligible affordable residential housing.

A key area of negotiation in the UK, which varies from project to project, has been the proportion of apartments which are required to be made available on a discount-to-market rent.

In this regard a range of policy positions is being advanced in the UK. The Mayor of London’s Draft London Plan, for example, recommends that Build to Rent should include at least 35% affordable housing.

The most dynamic region in the world for co-living is Asia.

Invesco Real Estate estimates that more than 500 professionally-managed locations exist in the region today, with more in the pipeline. The region has exhibited the strongest growth in co-living spaces globally and is gaining increased institutional interest from global investors. By comparison, the existing US and European markets combined represent less than half of the estimated co-living stock in Asia.

Historically, Australia has high rates of home ownership, which tend against Build to Rent projects as a legitimate alternative to build-to-sell. However, as housing affordability becomes an increasing issue, it is likely that younger generations of Australians will seek an alternative product offering.

Build to Rent projects can provide a convenient lifestyle, with greater access to amenities such as in-house cleaning, maintenance, landscaping and on-site property and facilities management provided by the asset's owner.