12 Dec 2018
Innovative models like build-to-rent are part of the future of the Australian property sector – the challenge is making sure people know enough to take advantage of them.
As Chris Key, Managing Director of Greystar Asia Pacific says, "we don't need to teach people how to rent - we just need to teach them that there's a better experience out there”.
Still a relatively new type of development project in Australia, ‘B2R’ – known as ‘multi-family accommodation’ overseas, including in the United States and United Kingdom, is a model which sees homes built by developers for the purpose of being provided for rent rather than being sold to owner-occupiers.
"It’s really important we break down any myths there are about what the product is.” – Chris Key, Greystar
A guest at an Australia Israel Chamber of Commerce event centred on innovative models of property development, Key says education is vital to the future of B2R in Australia. It is already proving attractive to a range of participants in the housing industry, all of whom are either looking to address, or feeling the effects of Australia’s long-standing housing affordability issues.
“The viability of the sector will really hinge on… an acceptance of what the industry is and what the sector is. There's certainly been a very deep sense of education that's gone on with both government investors and banks.”
Data show Australia is in the midst of a shift away from home ownership towards renting. Renters currently make up more than 30 per cent of households, up from 29 per cent in the 2011 Census.
B2R aims to address issues around housing supply, social housing and housing affordability. In Redfern, Sydney, the New South Wales government is building Australia’s first mixed-tenure build-to-rent site.
“It's a new model of social housing integrated with affordable and private housing,” Anne Skewes, Deputy Secretary, NSW Land and Housing Corporation says.
“We know from all of the engagement we've done with the market there is genuinely, truly an interest in the type of concept that we're putting out through the Redfern site.”
“For us it also goes to the proposition of creating more-affordable private and social housing in mixed communities which in itself is a very innovative concept.”
Managing director of hybrid build-to-rent property developer Assemble Communities, Kris Daff, says innovative models in the sector can often run into consumer distrust or expectations there’s a ‘catch’.
“There’s a deep distrust from consumers and customers out there towards development projects and the development industry so we’ve got to do a lot of work to break that down,” he says.
“We’ve got some goodwill in that space but to actually be able to tell our customers honestly and have them believe that there’s no fine print – there’s no hook, it really is a fair deal for them – has been a new challenge.”
The comments were made as part of a panel featuring Daff, Key, Skewes, ANZ Housing Program Lead Caryn Kakas and Brendan Crotty chair of the National Housing Finance and Investment Corporation.
You can listen to the podcast below to hear an edited version of the discussion.
The NSW Government-owned site is close to Sydney’s central business district and transport, providing residents access to work, community and leisure activities – all lifestyle opportunities always attractive to private residents but not always available to those in need of housing support.
Key says while B2R is in its relative infancy in Australia a number of consumers, government, investors and banks are starting to come on board.
“To ultimately get scale into the industry and have it accepted as an asset class both by institutions but also consumers it’s really important we break down any myths there are about what the product is - and have a tailored policy response that meets the need of build-to-rent,” he says.
Kakas is optimistic about the opportunities B2R offers at a time when there’s volatility in the market and when affordable housing remains a remote possibility for some Australians.
“Part of ANZ’s purpose [includes] three issues that we care about most and those are housing, financial well-being and environmental sustainability,” she says.
“That means looking at housing not only for people to buy but also for rent and [build to rent] has a natural synergy in that way because it really allows us to look at long-term, stable rental accommodation for more than a third of the Australian population.”
Peter Thomas is State Director, Property – Business & Private Banking at ANZ
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
12 Dec 2018
21 Nov 2018