Build to Rent (BTR) has been around for a few years now, but is a pretty new concept for most developers and property investors. In recent months, it’s started to take off in Australia and is set to become a valuable new asset class for investors. So, what is this concept all about and what’s changed to make it the next big thing in the property investment market?
What is Build to Rent?
Essentially, rather than building a development to sell units, you build to supply the rental market. It creates an effective alternative to long-term homeownership for a market that is more mobile and less rooted than previous generations. The format keeps the developer or building owner as the ongoing building manager and allows tenants flexibility as well as better security and service.
Housing Deficit and Affordability
This is a global issue that has captured the headlines in cities all around the world, from New York and London to Melbourne, Sydney and Brisbane. As Millennials enter the property market and start reaching the peak in their careers and family lives, there’s been a surge in demand and a cultural shift that is establishing private rental to the fore with the market demanding high-quality design, delivery and long-term management. The market is demanding affordable, central rental opportunities that are amenity-rich – and BTR is an effective way to supply this.
Relaxation of Tax Challenges for Investors
Legislation has started responding to this market demand by relaxing tax-related challenges that previously made BTR developments less appealing to investors. Both New South Wales and Victorian governments have introduced incentives to feed investor appetite, including discounts of 50% or more on land tax for BTR developments, and more Federal and State Government concessions are expected to occur in the near future to stimulate and sustain economic activity and employment.
Proven Success of BTR Projects
BTR has been a viable property investment option in other cities for years and provides a proven track record for the business model. In cities around the world, BTR has met the rising demand for secure, quality rentals successfully – both in commercial and residential sectors. This gives Australian property developers and property investors a clear roadmap to successful BTR projects.
A Successful BTR Development Needs the Right Partners
i2C has invested considerably in understanding this new sector and the opportunities it delivers, and have joined forces with Ryder Architecture out of the UK, Canada and Hong Kong. Together, we bring the knowledge and valuable experience Ryder has gained from the design of over 3,000 B2R apartments during the past 7-10 years to Australia.
In light of the changing property investment and property development market, including the introduction of government incentives and rental demand driven by Millennials, i2C | Ryder has looked to define the key characteristics of Build to Rent (BTR), focusing on the importance of brand identity and creating places.
With our in-depth knowledge of the BTR sector and the Australian property market, we’re ready to assist you in making your Build to Rent property development a success.