Build to Rent advisory Franklin St. has released its free and user friendly Build to Rent Pipeline Map online, which shows almost 52,000 units across 144 projects.
The corresponding research report also shows the various stages (from conceptual to operational) of announced Build to Rent projects across Australia. The total pipeline is broken down into 17,000 units delivered or under construction and almost 35,000 units still seeking a permit, funding or both.
“In order to successfully fund a Build to Rent project, a broad set of design and development principles need to be executed. It is crucial to properly understand the nuance of institutional ownership when undertaking a Build to Rent project.”
Tristan Quinn, Principal, Franklin St.
Highlights from Franklin St.’s research showcases the extent of the sectors growth:
Market evolution
The Australian Build to Rent market has experienced significant growth over the last few years, with 144 projects encompassing 51,947 units either proposed, under development, or completed with a further 10,000+ units yet to be formally announced.
Exponential growth in operating units
In 2024, the Build to Rent market is expected to see 15 projects finish construction and start operations, which totals 4,827 units. Combined with the 5,398 units already operating, Franklin St. anticipates over 10,000 Build to Rent units to be online by the year’s end – double where the market sits today.
This growth is forecast to continue through to 2027, by which point there could be 48,675 units in operation. If sustained, the growth of Build to Rent would achieve the 150,000-unit mark before 2030, earlier than previously forecast.
However, this sustained growth will be highly dependent on clarification and progress around items such as MIT and ‘Thin Cap’ – among others.
“Our map has highlighted the similarities between the Australian and UK Build to Rent markets and how they are evolving. From a geographical perspective, the two markets have taken root in inner-city locations, predominantly in high income areas, subsequently expanding out to the middle ring sub-markets, primarily along train lines. With further evolution, we are now seeing significant investment into key worker and affordable product in further-ring submarkets. We expect this trend to continue with the release of HAFF funding and other targeted grants.”
Edward Quinn, Principal, Franklin St.
Industry sector forecasts
Based on Franklin St.’s involvement in the Build to Rent sector, industry discussions, and comparisons with mature and evolving markets in the US and UK, the company have provided the following forecasts for the sector in Australia.
Increased market breadth: there will be a significant shift away from high-rent, high-amenitised projects in high-income inner urban locations towards middle- and lower-income suburbs. Projects will become more focused on neighbourhood interaction and access to public transport, and less attention on high-serviced offerings that are proving increasingly costly to operate.
Transaction evidence: 2024 may see Australia’s first transaction for an operating Build to Rent asset, providing the industry with much needed valuation metrics. This market evidence will pave the way for further investment from institutional capital, which will ultimately see more projects funded and starting construction.
Consolidation of Build to Rent platforms: Franklin St. predict that the industry may see some early movers take capital through asset divestment, leading to consolidation of ownership among a smaller subset of larger Build to Rent owners and operators.
