luxury apartments
The second half of last year saw a 28 per cent rise in the number of new projects. Image: Daniel DiNuzzo
  • 40 projects has resulted in a total of 15,000 units
  • BTR market is worth more than $10 billion
  • Melbourne counts for 50 per cent of Australian market

The achievement was a key highlight in CBRE’s Build-to-Rent (BTR) Development Pipeline report, a biannual profile of such projects across Australia.

Specifically, the pipeline has expanded by 68 per cent thanks to 40 projects which has seen the total number of units increase close to 15,000 units – a record high for this particular asset class.

It is estimated the size of this market exceeds $10 billion with $3-5 billion projects currently under consideration.

The second half of last year saw a 28 per cent rise in the number of new projects compared to the first six months of 2020.

10 projects have been announced in that past seven months – which amounts to more than 3,300 units.  Sponsors who already have at least one build-to-rent investment in Australia secured six of these projects.

11 groups at the time of publication are developing at least one project.

CBRE’s Associate Director of Structured Transactions and Advisory Services, Puian Mollaian, remarked that 57 per cent of the total pipeline is facilitated by offshore institutional funding.

“Global investment in Australia’s BTR sector has been driven by the asset class’s stable cash flows in a low yield environment,” said Mr Mollaian, who also authored the report.

According to the report, Melbourne represents half of the national market with Sydney accounting for 25 per cent.

Queensland is also recording strong activity thanks to both public and private investment.

“Victoria and Queensland are generally supported by a greater availability of suitable development sites and lower barriers to entry, in comparison to Sydney where site values remain comparatively elevated,” Mr Mollaian explained.

Andrew McCasker, Pacific Managing Director of CBRE’s Debt and Structured Finance business, added that securing favourable debt financing remained critical for BTR projects.

“In this regard, it is encouraging to see new dedicated products tailored to this market, with larger allocations of capital being made by both traditional lenders, the big four Australian banks, as well as non-bank lenders such as insurance groups, private equity and private credit funds,” Mr McCasker said.

“We expect funding appetite to increase as the asset class, and knowledge of the industry, evolves and matures in Australia.”

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