Build-to-rent (BTR) and co-living projects are gaining traction across Australia's development and investment community, resulting in a rapidly growing pipeline, new research has found.

A Savills analysis has revealed that 2,326 build-to-rent units were complete across the country as the first half of 2020 came to an end, with a further 611 units operating as Co-living.

An additional 895 ruild-to-rent and 389 Co-living units are under construction- representing an increase of 730 BTR units from the corresponding period last year, or a 38 per cent rise over 12 months.

At a glance: 

• New research has found that 2,326 build-to-rent units were complete as the first half of 2020 came to an end, with a further 611 units operating as Co-living.
• The NSW Government has been quick to acknowledge the need to boost the housing construction industry since the onset of the downturn, announcing a 50 per cent land tax discount on new (post-July 1 construction) purpose-built rental units.
• According to Savills, Australia is hot on the heels of the UK's decade long build-to-rent growth spurt. 

Savills Australia Student Accommodation Director Conal Newland said Build-to-Rent or Co-living assets had the potential to deliver a sense of belonging and connection through shared amenity space and resident community engagement.

“Investors remain confident on the long term core investment themes of Australian residential rental accommodation," he said.

“The proposed NSW planning changes are designed to simplify planning controls to support investment in diverse and affordable housing types including build-to-rent, co-living, social and student housing."

The NSW Government has been quick to acknowledge the need to boost the housing construction industry since the onset of the downturn, announcing a 50 per cent land tax discount on new (post July 1 construction) purpose-built rental units, to be managed under a unified single ownership and over a threshold of 50 units.

An exemption from foreign investor surcharges will also be provided until 2040 for Build-to-Rent developers. 

Mr Newland said the new proposals will ultimately create more options for investors and builders of developments and decisively more housing options. 

“The NSW Government is also exhibiting a new planning policy that includes proposed development standards for build-to-rent projects across the state.

"It will include design guidance on context and character, sustainability and amenity."

Source: Savills

Fellow Savills Australia Student Accommodation Director and author of the Savills Development Spotlight on build-to-rent and Co-Living report, Paul Savitz, said Australia was hot on the heels of the UK's decade long build-to-rent growth spurt, a trend that domestic and global investors and developers had been keeping a close eye on.

“In the first five years, from the emergence of the first build-to-rent scheme in London 8,000 units were completed," he said.

"Savills analysis of the Australian build-to-rent pipeline highlights that the emergence of the sector will occur at the same speed as the UK equivalent, with 8,000 units completed over the same five-year milestone.” 

According to Savills data, over £10 billion (AU$18.4bn) in investment into the UK’s BTR sector over the past five years.

Mr Newland said while the Australian build-to-rent and co-living market had so far operated at a small scale and fragmented level, development and consolidation were expected in the future, as has happened in the student accommodation market, which is now led by a small number of groups backed by global capital. 

“A significant weight of capital is currently looking to enter the Australian build-to-rent and Co-living accommodation sector, but there are limited opportunities to access the market, the significant development pipeline, changing living trends, and materialising government support may open up greater opportunities," he said.

Click here to view Savills' Development Spotlight on Build-to-Rent and Co-Living report.

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