The launch of the new Property Council of Australia and MSCI Australia Build to Rent Property Index comes as Australia’s housing challenge is often discussed through the lens of supply targets, planning reform and affordability.
However, behind the policy debate, housing as a recognised institutional asset class is emerging. Tracking 13 funds, 44 assets and 25 developments with a combined capital value of $10bn, the index provides the first dedicated benchmark for Australia’s Build to Rent sector.
“Build to Rent has arrived, and together with other institutional housing models will play an important role in delivering more high-quality rental homes for Australians at scale.
“Institutional investors are looking for markets where they can invest with confidence. Better data, greater transparency and more mature investment settings all help attract the long-term capital needed to deliver more housing.”
Matthew Kandelaars, Group Executive Policy and Advocacy, Property Council
For many institutional investors, a lack of reliable performance data has historically been one of the barriers to allocating capital into emerging residential sectors, according to the Property Council.
The new index addresses that challenge by providing a credible benchmark for investors evaluating Build to Rent against more established property sectors such as office, retail and industrial.
“For institutional investors evaluating Build to Rent as a standalone allocation, or comparing it against established commercial property sectors, a credible performance benchmark has been a missing piece.
“These results show the sector holding its own against core real estate on a risk-adjusted basis, with a distinctive yield and cost structure that investors now have the data to properly underwrite.”
Ben Martin-Henry, Head of Private Assets Research, MSCI
Globally, investors are increasingly viewing housing through the same lens as infrastructure: long-term income, scale and predictability.
As Australia’s housing market matures, institutional capital is playing a larger role across sectors including Build to Rent, purpose-built student accommodation (PBSA), later living and land lease communities.
According to the research, the emergence of a benchmarked Build to Rent sector provides another signal that Australia’s residential investment market is maturing and becoming easier for large domestic and offshore investors to assess.
This matters because institutional capital brings a different investment horizon. Rather than focusing solely on development and sales cycles, these investors are often seeking long-duration assets capable of generating income over decades.
The launch and findings were recently featured by global institutional property investment publication International Real Estate Investor (IREI), highlighting growing international interest in Australia’s emerging build-to-rent market.
For offshore investors, transparent market data and performance benchmarks are often prerequisites for capital allocation decisions.
The publication of Australia’s first dedicated Build to Rent benchmark helps place the sector on the radar of global pension funds, insurers, sovereign investors and specialist real estate managers.
As participation for the index increases, so too will the depth of available data, providing investors with a more detailed picture of the performance and scale of Australia’s institutional residential market.
“Contributing to the Index not only improves market transparency but also sends a very strong signal that Australia’s institutional residential market is continuing to mature.”
Matthew Kandelaars, Group Executive Policy and Advocacy, Property Council
