The build-to-rent sector, where building owners hold the apartments for lease instead of sales, is the growth engine in commercial property. Known as multifamily in the US, the sector is viewed as a way to alleviate the problem of housing affordability.
The federal government introduced some tax incentives in its latest budget to make the sector attractive for developers and investors.
Ben Martin-Henry, MSCI head of real assets research, Pacific, said when considering Australia’s private residential rental market, characterised by low national vacancy rates hovering around 1 per cent, surging rents, and persistent undersupply, “the demand for BTR [build-to-rent] units is expected to be very robust”.
“The outlook for the BTR sector appears bright, and it would not be surprising to see it surpass the industrial sector to become the top-performing asset class in years to come,” Martin-Henry said.
“There have been several new BTR developments announced, and whilst these were certainly already in the works, the tax changes do indicate the potential for increased interest and investment in the sector.”
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