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Build-to-rent vital to address housing market post-COVID
Allens has called for urgent policy action to encourage build-to-rent development that could play an important role for Australia’s housing market post-pandemic.
Tony Zhang
According to the new Build to Rent report tabled by Allens and consulting firm Urbis, Australia must strike now if it is to unlock the full potential of build-to-rent (BTR), which could not only play a key role in Australia’s economic recovery from COVID-19, but could also address Australia’s ongoing housing undersupply and ensure the future liveability and resilience of its cities.
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“Now more than ever, we need policy change in this sector, requiring a strong commitment from all levels of government to reduce barriers to BTR viability,” Allens real estate partner Tim Chislett said.
“If policy settings allow, BTR development will get cranes in the sky more quickly than any other asset class, promoting economic recovery from COVID-19 while addressing Australia’s ongoing housing crisis.”
Mr Chislett said with further support from governments, the sector has potential to become large enough to improve liveability and affordability, and address Australia’s accommodation supply shortage.
“BTR supporters aren’t necessarily asking governments for more favourable concessions than other asset classes; they’re simply seeking a level playing field. With some key policy changes, BTR’s potential will be unlocked,” she said.
Fellow Allens partner Michael Graves said a thriving BTR sector offers a range of economic and social benefits and caters to the demands of modern consumers.
“It’s no longer about owning a house. There’s a need for accommodation that’s close to work, offers high quality amenities and guarantees security of tenure, and BTR deliver on all these demands,” Mr Graves added.
The report revealed that unlike commercial, industrial or traditional build-to-sell residential developments, BTR developments do not require presales or preleasing to ensure viability, which significantly reduces development time frames and creates jobs and investment opportunities immediately.
Conservative estimates made by Urbis indicate that by stimulating BTR delivery even to an initial scale of 10,000 apartments could support an average of 3,500 jobs per year linked to the construction phase alone.
As a result, increasing that to 50,000 apartments – roughly a third of the inner-city apartment pipeline on the eastern seaboard – could support approximately 19,000 jobs per year in the construction phase alone, as well as an average of $2.9 billion in gross value added.
The report analysed that by generating enough housing supply to meet current and future demand (from diverse segments of the population at different price points), BTR also offers a solution to Australia’s housing undersupply issues, which endure despite the suspension of international migration.
“BTR is the quickest solution to increase housing choice and capacity at scale,” joint lead author Mark Dawson, director at Urbis, said.
“Despite current reduced migration rates, Australia still has a considerable housing demand gap that needs to be plugged. BTR provides an opportunity to increase supply, improve housing options and ensure Australia remains a liveable and resilient country into the future.”
