Why build to rent can be the best thing to happen to a neighbourhood
- Written by Peter Rose, Director at Forbury
There’s a lot to like about large scale residential developments owned and managed by corporate landlords, points out Forbury Director, Peter Rose.
A little discussed asset class until recently in Australia, build to rent is going off with a bang Down Under. Multiple inner city projects are under development across the country, as institutional investors look to the long term.
Governments, too, are keen on the model and its potential to relieve stretched private rental markets, by delivering a large volume of new dwellings in popular areas, at speed. Several states have introduced 50 per cent land tax incentives for BTR developers and, although it’s not the object of the exercise, political leaders are enthused about the opportunity to create more social and affordable housing in the process.
But what will the neighbours think?
In my experience, it’s common for property owners and residents living in the area to be underwhelmed by the prospect of gaining hundreds of new neighbours, courtesy of the skyline altering, multi-unit complexes materialising on their doorsteps. Is this predictable NIMBYism? Or ignorance about the benefits these developments can offer, to the community in general and the suburbs where they’re built?
I’d like to think it’s the latter, and that more education about the upside will see Australians come to view the emergence of this new residential rental category positively.
BTR benefits
Firstly, because BTR apartments can be a sustainable, pollution busting alternative to the detached homes and low-rise unit blocks which have comprised the bulk of Australia’s rental housing stock historically.
While locals may anticipate traffic gridlock with several hundred new cars being added to their streets, their concerns are usually unfounded. BTR developers typically choose sites with superb public transport links, and with car spaces typically a paid extra, many folks opt out of owning a car.
Even more so if the developer has the smarts to provide private transport options, in the form of car, bicycle and scooter sharing facilities. Economies of scale mean BTR operators can profitably offer this and many other on-site services – think dry cleaning, parcel storage and the like – that minimise the need to drive, and turn their premises into efficient, ultra-convenient hubs.
Land usage tends to be efficient too. It’s not uncommon for BTR developments to be located on brownfield sites where disused shops or businesses once stood, or in the free airspace atop railway stations and shopping centres. They can generate much needed foot traffic for the latter; making it viable for local cafes and retail businesses to keep the doors open.
Keeping up appearances
BTR apartments and complexes are likely to be meticulously maintained – perhaps far more so than conventional rental properties whose mum and dad landlords are preoccupied with keeping expenditure to a minimum. Because maximum, continuous occupancy is the name of the game, BTR operators can’t risk their facilities becoming tired, rundown or overgrown. Typically, they’ll be looking to achieve top-of-the-market rent – a premium of 10 per cent on comparable, privately owned dwellings is the norm – and they know prospective tenants won’t be willing to pay for, and stay in, dilapidated digs.
They may look after more than just their own backyards too. Far sighted BTR developers and operators advocate for, and even help fund, local infrastructure and amenities. Whether it’s lobbying the government to build a community hall or chipping in to upgrade nearby walking or cycling tracks, it’s in their interest to invigorate the neighbourhoods where their assets are situated, for all residents.
Here comes the neighbourhood
And last but not least, high end facilities tend to attract high quality tenants. BTR residents are typically young, educated and upwardly mobile. They’re likely to be contributors and assets to the communities in which they live. Their collective presence may help to drive property prices up; making the neighbourhoods into which they move even more desirable.
As BTR momentum continues to build across Australia’s capital cities, we’ll be intrigued to see whether locals’ enthusiasm for the concept increases alongside it.
