Build-to-rent, a housing concept where the developer retains ownership of a multi-residential building while renting out the units to tenants, is trending in the property industry. Highly successful in the USA as well as in the UK housing market where it is showing significant growth, build-to-rent or BTR is yet to take off in Australia with versions existing in defence, aged care and student housing developments.
However, current trends in housing and demographics indicate that Australia is moving towards a BTR future. Australia’s changing housing market dynamics have seen the number of rental households increasing from 27 percent to 31 percent in the decade to 2014, representing half a million new units. Housing affordability is a major issue with capital city housing prices rising by 15 percent in just five years. Millennials make up about a third of Australian rental households though cities such as Sydney (53 percent) and Melbourne (48 percent) report a higher proportion.
In addition to millennials, Australia’s housing rental market is driven by retirees looking to downsize, young couples and families, and new arrivals. With renting gradually becoming a lifestyle choice, the BTR concept fits right in with this market. The BTR model is slowly catching on with a total of 4,600 apartments planned across 11 national projects over the last three years.
Grocon was an early entrant in the BTR segment when they converted the Gold Coast Commonwealth Games athletes’ village into a BTR precinct, followed by projects in Perth and Melbourne’s Southbank. Mirvac has a new BTR project under construction at Sydney Olympic Park and has committed to purchase 490 build-to-rent apartments targeted at the higher-end luxury market in Melbourne’s CBD.
The long-term success of BTR developments depends on their ability to attract and retain tenants. This can be achieved by designing inspirational and aspirational spaces, and fostering a sense of belonging by creating a community. Given that these developments will cater to a diverse demographic, the development must provide a variety of spaces that address the needs of different types of users. Design, quality and a sense-of-place can be key differentiators in attracting and retaining long-term tenants. The design should ensure that the right kind of place is created for the people destined to use it, and must, therefore, factor in several aspects including demographics, functionality, usability, accessibility, flexibility, sustainability, resilience and longevity.
Hassell’s Medibank building project in Melbourne’s Docklands was based on a comprehensive strategy to deliver a custom-designed office building that was also one of the world’s healthiest workplaces. Though the building is owned by CBUS, Medibank is the anchor tenant; therefore, Medibank’s aspirations drove the design. Health and wellbeing were prioritised in the design, resulting in unique features such as an edible garden, an internal bicycle ramp and even a multipurpose sports court.
A holistic approach to design is recommended for BTR developments – this means the project must have the architecture, landscape and urban design, and interior design teams working together with a common vision in order to deliver places that flow naturally from space to space.
Hassell took a multi-disciplinary approach on their Flour Mill of Summer Hill project in Sydney – an approach that helped transform an old industrial site into a new community of homes, shops, cafes and parklands with a genuine sense of place. The developer, EG Funds organises events for residents in the common space, actively connecting with them.
While build-to-rent is expected to boost the Australian housing market, it’s important to ensure that BTR projects are designed well keeping the future residents in mind so that they live there long term.
Based on the article ‘Design it, build it, rent it – Australia’s BTR future’ by Jeremy Schluter – Senior Associate at Hassell.