Already a major draw for capital in the US and UK, where renting is a much more accepted form of housing, it’s now finally receiving recognition in Australia.
“Overseas, it’s already big but here it’s been comparatively slow to take off,” Andrew Hansen, Mirvac national director of operations.
“It’s a bit early, but I think we’ll now be seeing it more and more if what we’ve seen overseas is anything to go by.
“Our biggest challenge is that local superannuation firms tend to be very conservative and this is a new kind of commercial asset class in Australia to them. But, it offers a stable, solid return on investment, defensive revenue, with our new build-to-rent in Sydney Olympic Park offering about a 4.5 per cent return. It’s a very steady income with potential for upside.”
The concept of build-to-rent has been around for a while internationally but has only just physically arrived in Australia, with the first Sydney offering now leasing to tenants.
It’s 315 apartments in two towers called LIV Indigo, part of the 700 apartment-and-terrace Pavilions development, developed, retained and managed by Mirvac.
Mirvac let it for above-market rents and with far more facilities (such as on-site managers, gyms, working spaces, a dining room, theatre and children’s playroom) than a regular build-to-sell. Tenants sign up for a year and can renew leases for as long as they want.
In the UK, for example, there are now an estimated 170,000 build-to-rent apartments in the planning, construction and operational phases in London, Birmingham, Manchester and other big cities.
But in Australia, beginning from a standing start, Mr Hansen believes we’re now seeing an explosion in the take-up rate, with rental apartments being built or planned for Sydney, Melbourne and Perth, and developers now eyeing Newcastle, Geelong, Wollongong and several other regional cities.