APG, Europe’s largest investor, has joined the ranks of cashed-up investors exploring the potential of build-to-rent residential developments in Australia. If it takes hold, it has the potential to transform Australia’s housing market. Will it give rising numbers of lifelong renters a better deal?
The ‘Great Australian Dream’ of families, rich and poor, owning a home is dying a slow death. Growing in its place is the traditional Australian rental market primarily made up of mum and dad investors.
Consumer advocates say this doesn’t always lead to the best deal for renters. The lack of formal disclosure on the quality of the property when a rental lease is signed, poor transparency around what tenants can expect from property managers and landlords, along with limited certainty over things like bringing pets into the home mean renters face a lot of unknowns when they move in.
Yet consumers could soon have another option. Build-to-rent accommodation could be a driving force towards professionalisation of the rental industry.
Known as multi-family accommodation in the United States and United Kingdom, it refers to housing developments that are built to be rented, not sold individually. Any introduction onshore could herald a landmark change for certainty and transparency for renters.
It is a well-established sector abroad that scarcely exists in Australia. But over the past year, a range of powerful interests have expressed a renewed desire to see purpose built rental homes take hold locally.
” Renting in Australia still comes with too little certainty and too few guarantees to make it a desirable long-term choice.”
Developers including Mirvac, Grocon and Lend Lease are looking keenly at it – as are large overseas investors such as APG and Invesco. Policymakers are exploring ways to kickstart the sector as a solution to the woes of the rental market, as well as possible flow-on impacts to housing affordability.
Graeme Torre, head of private real estate in the Asia Pacific for Dutch pension fund APG, believes it is only a matter of time before built-to-rent homes are a feature of the Australian property landscape. They have the potential to give renters a better product than they get now, he says.
“We think it’s a sector just waiting to happen,” Torre says. “Residential property in Australia that is available for rent is a very segregated, disparate market.”
“There are many different owners of one or two or three units. There is very little branded and properly managed, purpose-built rental accommodation like you would find in the US or Europe or even Tokyo.”