Housing industry experts predict that the practice of “build-to-rent” will become incredibly popular in Australia over the next five years.
Build-to-rent is when developers design and build residential property specifically with long-term rental in mind.
Build-to-rent has already taken off in the U.S and is experiencing rapid growth in the U.K.
Developers and investors are attracted to build-to-rent because it offers the ability to maintain control over the development, while receiving a steady income.
For tenants, the potential benefits include superior maintenance services, communal areas such as shared workspaces, rolling long-term leases that can be transferred to other allied residential blocks and more affordable housing.
“It’s a lifestyle choice of millennials, young families and downsizers, and the choice of a growing number of people,” Adam Hirst, general manager capital allocation at developers Mirvac, told a housing conference in Sydney.
“There are currently 2.5 million rental homes in Australia and we see that growing in the next few years with purpose-built apartment buildings for the rental market. It’s well-established overseas but, in Australia, it’s a new form of housing and there’s a lot of excitement around it.”
According to Ernst & Young Australia, two-thirds of the 30% of Millennials currently renting believe they will never own their own home.
“The real driver for build to rent in 2017 is those millennials,” said Richard Brice, director of real estate advisory services at Ernst & Young. “They want to be near services and jobs and entertainment facilities, and they are looking for on-site flexibility and having places to work within their buildings.”