Citylife International is a private Australian real estate agency, advisory and consultancy company, with a focus on selling units in the St. Kilda Road precinct of 416, 416A and 418
There are a few particularly important considerations.
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Firstly, migration and student intake into Australia was curtailed during Covid.
But that does not mean the demand to migrate or study in Australia has gone away.
In fact, it is likely that Australia will become even more popular then ever before going forward.
Second, residential property supply, in all Australia's capital cities is falling. Australia is potentially facing by 2024 a massive rental accomodation shortage through standard apartment supply.
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Even before the COVID-19 crisis, supply and construction was falling.
So, when things start to get back to normal, and when migration opens again, when travellers can come back to Australia, when students return, when Australians living overseas return, there is potentially a large deficit in supply and properties to rent.
Airbnb will open again for tourists and interstate visitors, taking even more properties off the long-term rental market.
Build to Rent has the potential to fill this gap, especially in the "rental sweet spot" - that is, affordable, rental in prime locations. Affordable being the key point.
Not high end, high rent buildings.
But importantly, one of the (many) lessons the virus has taught us is this:
What has proven to be crucial during Covid was LOGISTICS, and ACCOMMODATION.
Those wanting short three to six-month type leases are likely to be struggling.
Then also not to be underestimated is young people - in particular in Australia - have been immune from all previous major economic setbacks.
This was their first real crisis.Infaltion and rising interest rates will be the second.
Many will want to lower their overheads, rental being one of the main overheads for young people.
When the rents crisis started in early 2022 in many places around Australia, it became clear that tenanst will accept smaller spaces, but only if well designed, well fitted out, and well equipped, exactly what some Build to Rent projects will offer.
The pandemic has also taught us that people crave social connection.
They will also be attracted to buildings that offer additional services, usually only found in high end developments, such as security, concierge services, housekeeping or cleaning, laundry services, residential facilities like BBQ and a roof terrace, and so on.
Build to Rent projects provide customised and exclusive building and tenancy management services.
Tenants in traditional buildings have individual landlords, and a myriad of different estate agents collecting the rent and "looking after them", when in fact they generally provide little services (if any) to tenants.
This is a HUGE difference with Build to Rent.
With professional in-house management and tenancy services, tenants will be - perhaps for the first time in their rental life - the focus of the organisation.
The "customer".
Rather than someone simply to pay the landlords mortgage.
Also the traditional student housing, serviced apartment or studio flat does not match any of these requirements.
The Build to Rent model takes up all these spaces and has not yet been done to any large degree in Australia, especially at the more affordable end of the market.
In fact Build to Rent is BRAND NEW to Australia. And this is a huge opportunity.
For developers. For investors..
A product like this, that is flexible (in stay, length, market) and offering (size, scope, kitchen, laundry) is more aligned to demographic and societal shifts.
Designed to make it as available to as many people as possible, while selecting the most optimal operating models commercially.
The opportunity is to capture the demand from the external and shorter stay market as well as those wanting very long leases to increase the demand pool. Widen the funnel.
One may assert then that co-living is borne out of economic necessity.
Some may rightly wonder whether co-living is merely affordable housing in new packaging.
With many institutional investors have been shying away from engaging in affordable housing for a variety of reasons, a word on distinction is in order.
Affordable housing is often used as a blanket term to cover all manner of residential product – in the US, it can mean subsidized housing (through federal, state or local grants used to offset rents for select populations), low income and rent controlled housing (whereby households making well below the areas median income have dedicated and protected housing options), and rent stabilised (whereby households qualify for reductions to market-rate apartments and annual renewals are subject to escalations approved by local administration).
Build to Rent is none of these.
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