Australia must strike now if it is to unlock the full potential of build-to-rent, say Urbis and Allens in a new report.
Three key takeaways:
- Residential construction typically accounts for around 750,000 direct and indirect jobs, and 7.5% of total growth in the economy
- Stimulating delivery of 10,000 BTR apartments could support around 3,520 jobs per year during the construction phase
- Accelerating delivery of BTR to 50,000 apartments – roughly a third of the inner-city apartment pipeline on the eastern seaboard – could support around 19,000 jobs each year and $2.9 billion in economic value.
Build-to-rent: stimulating recovery, ensuring resilience argues that the emerging asset class could play a key role in Australia’s economic recovery from COVID-19 while addressing the nation’s ongoing housing undersupply.
The report underscores the urgency of action, as the Housing Institute of Australia forecasts dwelling starts will decline by around 20 per cent in the next financial year.
Unlike commercial, industrial or traditional build-to-sell residential developments, BTR developments do not require pre-sales or pre-leasing to ensure viability, which significantly reduces development timeframes and creates jobs and investment opportunities immediately.
By generating enough housing supply to meet current and future demand, BTR also offers a solution to Australia’s housing undersupply issues, which endure despite the suspension of international migration.
Currently, BTR is not eligible for the 15 per cent Managing Investment Trusts withholding rate, which applies to foreign investors in other property asset classes. Urbis and Allens argue that, if given a level playing field through tax concessions, BTR has greater potential to attract overseas investment, aiding pandemic recovery and creating resilience in the residential development market.
The report’s joint lead author Tim Chislett, a partner in Allens’ real estate team, says the time is right for a policy change in the sector, and “a strong commitment from all levels of government to reduce barriers to BTR viability.”
“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,” Chislett adds.
Chislett’s co-author Mark Dawson, a director at Urbis, agrees. “BTR is the quickest solution to increase housing choice and capacity at scale,” he says.
“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.”
Download Build-to-rent: stimulating recovery, ensuring resilience.