This is naturally causing a shift in household mindsets as rental homes are traditionally owned by individual investors where tenure is short and tenants have little rights on the property, particularly around eviction. COVID-19 has only heightened the need for people to want more flexibility in their working and living.
Build to Rent can provide large scale housing developments in strategic locations that offer access to jobs, schools, amenities and services. Creating communities along transport centres provides opportunities for individuals and families to thrive. As house pricing in Australia remains very high globally, this opens doors for people to live in an area that is not ordinarily affordable.
The emergence of this model as a long-term property asset class has also attracted Real Estate Investment Trusts (REITs) and various capital investors keen to diversify their portfolios. This is now more important as retail and commercial property bears the brunt of the impacts of COVID-19.
As a long-term asset class that brings a regular income to investors, the design and construction of these assets needs to consider:
- Economies of scale for the design and procurement of joinery, white goods, tapware and the like
- Multiple sites that operate in the same market which can offer reduced operational costs (such as cleaning and maintenance)
- Long term supply contracts which need to be established for fixtures and fitting that include a maintain component
- A design driven by operations, sustainability and longevity. The selection of finishes, fabrics, materials, fixtures and fittings needs to be controlled and understood by the operator as it will be managed and maintained for the medium to long term
- A back of house real estate management system typical of retail and office development types that manages the regular income and expense cash management over time
This is not new and typical of hotels, short stay or student accommodation however with a degree of scale, these can change, activate and bring to life to communities.
APP operates across the full spectrum of the property sector and appreciates the challenges this growing development opportunity has in Australia. With multiple Build to Rent projects already in construction across multiple states, we are fast developing an understanding of the product and the optimum mode of delivery for such developments.
APP is currently working with Sentinel Australia on the construction of their second site in Perth and first in Melbourne. We look forward to handing over the second product to come to the Perth market in Subiaco. Element 27 phase 1 is complete and phase 2 is due to be available for rent late July 2021.