GROWING DEMAND TO BOOST BUILD-TO-RENT

 

SO SOON after TUD published this report: 

 ‘What we know about Sydney’s Mascot Towers’…

https://caanhousinginequalitywithaussieslockedout.wordpress.com/2019/06/18/the-urban-developer-what-we-know-about-sydneys-mascot-towers-cracks/?fbclid=IwAR0VCc0gzbYWicOm2WouIn_deQSuv17H1elMAqSNSQTbF9osqAsaH6ObloA

 

CAN’t say we are impressed! 


What is this all about?

Is the whole Build-to-Rent business just another quasi Ponzi Scheme?

Are BtR projects designed to entrap tenants where they …

-pay ever increasing rents reducing their capacity to save for a deposit and move to occupy their own property?

-are cash cows for owners;  with no real interest in them other than their capacity to pay rent

 IS the BtR concept also about shifting the risk envelope to a tenant?

-they are locked in

-they give up on the idea of owning a property and become members of a ‘renting class’ 

IT may also be about other agendas …

-is it about extracting governments out of the social housing equation?

-is it about extending privatisation into the social housing environment where:

.eviction can be easier because no government role would prevail
.over time a compliant class of semi permanent renters feed into the cashflows of BtR corporations 
.slowly develops a passive social agenda of excluding those less worthy 
.those unable to fit the BtR model become problems for the NGO sector?

DO some of us get a feeling about this kind of arrangement as being
-too cute
-something that has to be … no matter how it’s dressed up, about making money 
-designed to make money out of one of the necessities of life, shelter
-about furthering the commodification of shelter?

AS always 

-we are told it’s on the up overseas so we need to get on the bandwagon 
-it’s all rosy, only the up-side is mentioned 

Besides look at a recent 7.30 report, this week, about 

-how difficult it it is to move out of retirement living
-how it’s really not a purchase but a long term rental

Once again the big end of town are into it up to their arm pits, the story covering a Lend Lease retirement property, run by the same people who run shopping centres with similar and familiar sharpness

Indeed it seems the whole BtR concept is yet another vehicle for a few well set up players to make a motza from those less fortunate 

Related article … which explains more!

 Is build-to-rent all it is built up to be?

https://caanhousinginequalitywithaussieslockedout.wordpress.com/2019/04/24/10665/

Growing Demand to Boost Build-to-Rent

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Amid a backdrop of high housing costs and a growing rental population, build-to-rent development is expected to gain more momentum in key locations, particularly in Sydney and Melbourne, new research shows.

 

 

A growing pool of more than three million households will drive the Pacific region’s nascent build-to-rent sector if developers can provide the right product and amenity, says CBRE’s latest build-to-rent report.

The number of renter households in Australia has increased by 500,000 over the past decade, up to 31 per cent from 27 per cent.

While in New Zealand renter households have increased by 120,000, a rise to 34 per cent from 30 per cent.

 

Build-to-rent CBRE

Compounding the case, CBRE head of build-to-rent research Benjamin Martin-Henry says overall home ownership rates have been decreasing.

“Particularly in the 15-24 and 25-34 year age brackets, with declines of 30 per cent and 26 per cent respectively in Australia between 1995 and 2014,” he said.

“These results, while not being particularly surprising, highlight the problem for younger generations coming of age in a time of the new norms of lower economic growth, lower wage growth, high underemployment.”

It’s in this environment CBRE’s head of advisory Kelwyn Teo says build-to-rent development is expected to gain more momentum.

“But location will be key – particularly in markets such as Sydney and Melbourne,” he said.

“Unsurprisingly, the highest proportion of renters in Sydney and Melbourne are in some of the most desirable and, therefore, more expensive locations.

“Given the current high cost of land in these areas it will be difficult — but not impossible — to make build-to-rent developments stack up through a combination of key metrics including occupancy, stabilised rental growth and operational efficiencies.

“As land cost will still be a key factor, particularly in Sydney, we anticipate most developments will initially be in more fringe locations and, crucially, they are expected to be in and around population growth corridors or employment hubs supported by a good public transport systems such as Parramatta, Macquarie Park and Liverpool,” Teo said.

Related: Developers Offered Subsidies In $70 Million Build-To-Rent Scheme

Just this month Mirvac announced it will transform a key site next to the Queen Victoria Market into Melbourne's first build-to-rent complex.

Just this month Mirvac announced it will transform a key site next to the Queen Victoria Market in Melbourne.

The US has the most advanced build-to-rent market in the world with 21 million residences, according to the CBRE report.Due to the United Kingdom being a relative newcomer to the game, with 30,000 existing units, the report uses the UK’s market as a guide, with the mix of build-to-rent renters, including:

  • Younger independents aged 18-24: 22 per cent.
  • Flexible professionals, no children aged 25-44: 26 per cent
  • Budgeting families aged 25-44: 29 per cent.
  • Reconciled with renting aged 45 and upward: 23 per cent.

Implementing BtR across Australia and New Zealand

Teo says a key driver of build-to-rent take-up in the Pacific would be professional management, which he likened to a hotel or student accommodation, where the tenant was the customer and the focus of the operator was to increase retention.

“This could include provisions such as having a storage facility on site with spare parts for appliances to reduce the time a tenant must wait for a replacement or having staff onsite to attend to breakdowns.”

“Developers also need to be cognisant that different products appealed to entirely separate demographic and socio-economic niches.”

Another driver of sector growth in the Pacific region is competitive rental markets in metropolitan cities like Sydney, which often require renters to attend multiple inspections for often sub-standard accommodation.

“In the US and the UK, large-scale build-to-rent providers allow renters to drop into a leasing suite, talk to an agent or do an online virtual tour of various apartment styles,” Martin-Henry said.