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A growing interest in investing in build-to-rent (BTR) projects has led a major real estate network to carve out a team dedicated to the sector.
Colliers has appointed national directors Robert Papaleo and Jozef Dickinson to take charge of the new group. They’ll work with dedicated BTR experts on the ground in every state market, with the network expecting the surging popularity of the sector already seen in Melbourne and Sydney to catch on across the country’s major cities.
“To date, Melbourne and Sydney have been the two key BTR investment destinations with increasing signals that Brisbane will also emerge as a meaningful market,” Mr Dickinson said.
“Our team has witnessed the greatest momentum in Melbourne where land affordability, tax concessions and access to permit approved sites in prime near-CBD locations have been the drivers of acquisition activity,” he added.
The BTR sector in Melbourne accounts for an increasing share of the city’s major residential development site market, especially in the city fringe precincts. While in 2018, the sector accounted for $63 million, or 2 per cent, of the total sales value of development sites in Melbourne; that has grown to almost $400 million, or 14 per cent, in 2021.
According to Mr Dickinson, Colliers has played a large role in that transformation across the Victorian capital.
“Since 2018, Colliers has managed 85 per cent of agency-led transactions of BTR sites and forward sales of assets-upon-completion across Melbourne. We have also introduced almost all overseas entrants to their first deals in the Australian market,” he said.
Tim Storey, Colliers managing director of residential in Victoria, said all this activity made Melbourne a natural choice for the location of the new team.
“We are excited to expand our service offering to cater to both the changing needs of our existing clients and to also assist new entrants to enter the BTR market,” Mr Storey said.
Colliers’ recent Global Investor Sentiment Survey indicated that the BTR asset class was the third-highest sector of interest among investors in the Asia-Pacific region, with 34 per cent of respondents to the survey indicating they had future plans to invest in BTR.
The network’s research also found there are 3,013 purpose-built BTR units in 11 different projects across the country due to be completed by the end of this year.
Mr Papaleo noted that indicators for the number of new builds set to be completed in 2023 were currently strong as well.
“Looking ahead, there are five BTR projects under construction that will deliver 1,365 units in 2023 with a growing number of committed projects in the pipeline,” he said.
“A range of fundamental demand, supply and policy factors will continue to strongly support a higher allocation of international capital to Australia’s evolving residential markets, which remains characterised by a significant under-representation of sophisticated investors who are able to offer superior accommodation alternatives and achieve a corresponding rent premium,” he said.
“We firmly believe alternative markets will evolve over time as development sites transition to stabilised BTR assets that will then trade as standalone assets, portfolios, or even in some instances as individual dwellings as a form of alternate capital exit strategy for developers of the first generation buildings.”
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