Institutional capital is already positioning itself to invest in housing at scale. What the sector needs now is a policy and delivery environment that allows that capital to translate into new supply.
This includes rental living in all its forms such as Build to Rent, co-living and purpose-built student accommodation (PBSA).
By Tony Moussa, Head of Capital & Funds Management at Freecity
For example, according to ‘The Franklin St Australian Build to Rent Review 2026’, domestic institutional capital is expected to double its exposure to the Build to Rent sector. In addition, Australia’s superannuation system represents one of the largest pools of capital in the world, and rental housing aligns naturally with the long-term income streams those funds are designed to support.
In the case of Build to Rent, whilst there are still questions around the feasibility of the sector, many of them rooted in (GST) tax and regulatory settings, that have not yet adapted to this asset class, they risk narrowing the conversation to a single policy lever when the broader feasibility equation remains under pressure.
At a broader macro level, affordability in Australia continues to be a chronic issue, which is not supported by any of the current Iranian supply driven oil shocks, higher for longer inflation and interest rates, nor AI’s prospects for longer term job security and employment levels.
The economy must adapt in its ability to more efficiently create new housing supply which is sustainable as formation and changes in families continue to evolve. In simple terms, world events and crisis do not stop people growing and evolving in their lives and what they need when it comes to housing accommodation. If anything, periods of uncertainty increase demand for stable, secure rental options – which Build to Rent does offer through greater security of tenure for residents,
As developers, while we wait for movement from a regulatory perspective, we must also focus on long-term value creation. Rental living succeeds when resident demand, operational efficiency and capital performance are aligned and that requires discipline in how buildings are designed and operated.
The industry should prioritise amenities that genuinely enhance the rental experience while avoiding unnecessary complexity in buildings that are intended to operate for decades. Ultimately, the rental living product works best when it focuses on the fundamentals: well-designed apartments, strong management and a sustainable operating model.
Improving construction productivity will also be critical to making projects stack up. Traditional construction methods continue to face labour shortages, cost volatility and long delivery timelines. Modern methods of construction, including volumetric modular construction (VMC), offer a pathway to deliver rental living buildings faster and more efficiently while maintaining quality and safety standards.
VMC allows rental living accommodation to be manufactured in controlled factory environments before being assembled on site. Overseas markets have demonstrated that this approach can significantly reduce construction timelines and waste while improving consistency and build quality. For the rental living sector, where unit designs are often repeated across large projects, the efficiency gains can be significant.
Building out the capacity to supply more housing accommodation via VMC should be embraced at all levels as it is a pathway with fewer hurdles to achieve quicker accommodation outcomes, and which for an institutional landlord is a material consideration in improving the feasibility of projects compared to traditional methods of construction.
Institutional capital is increasingly focused on the living sector, domestic superannuation funds are beginning to participate more actively, and demand for rental housing continues to grow. The opportunity now is to create the conditions for that capital to flow more efficiently into new housing supply, particularly Build to Rent.
If policy settings support long-term investment, if construction productivity improves, and if the sector maintains discipline in how buildings are designed and operated, the rental living sector generally can become a meaningful part of the solution.
