LONDON: The build-to-rent market which is resonating with boomers is a preferred alternative to retirement villages is attracting a raft of new development participants.
Urban Property Group is pursuing a $600 million-plus mixed-use project, dominated by build-to-rent apartments, in Sydney’s Parramatta, and will tap into New South Wales’ state significant development (SSD) process to fast-track the plan.
Choosing the SSD track (by ensuring both a large-enough project and one that features a majority of BTR development) rather than opting into the local planning process will offer a speedier outcome, with savings and certainty for the family-owned development platform, according to its chief executive, Patrick Elias.
“We’re anticipating a more streamlined process than what the council would offer,” he said.
The sprawling 2811 square metre plot between Argyle and Fitzwilliam streets offers Urban Property plenty of scope for development after it acquired the site from Transport NSW last year. The site comes with planning controls that allow for BTR-style accommodation along with office and retail use.
The certainty of outcome through a state-level assessment is worth a premium for Urban Property.
“Certainty is a word that developers don’t really use enough,” Mr Elias said, “when you’re financing vacant sites and then having to immobilise teams [depending] on approvals.
“It is something that we really need in the business and especially in this economy and in this market, with rising interest rates. Having certainty in this process, it’s definitely a good thing.”
Urban Property’s proposal includes two towers, with over 33,000sq m dedicated to residential and almost 33,000 sq m for commercial office space, along with a small amount of retail. In all, the project comprises 316 apartments.
“We’ve looked to maximise the amount of BTR while the rest is commercial. What was front and centre for the BTR component is amenity. We wanted to ‘overkill’ with amenity – with a huge gym, a rooftop pool, music rooms, co-working space, a rooftop bar – and turn it into any renter’s dream,” Mr Elias said.
Urban Property has been steadily stepping up its involvement in build-to-rent housing, an asset class where a block of apartments is typically owned by one investor, or a small club of investors, with the accommodation expressly tailored as a rental offering, typically with improved amenities.
The rapidly growing sector could become the biggest asset class for new property development by 2030 – larger than offices, student accommodation and even logistics, according to an Oxford Economics Australia report last month.
That report forecasts new BTR project commencements will surge to $10 billion in calendar year 2030, up from about $2 billion last year and well above the end-decade figures of near-$6 billion for office builds and $5 billion for logistics commencements.
Mr Elias said institutionally owned, professionally run BTR would offer advantages over rental accommodation held by smaller private investors. Along with a 200-facility already built, Urban Property’s BTR pipeline has swelled to around 1000 units.
While developers typically looked to reap profit from selling down completed projects, the regularity and reliability of revenue from a BTR project brought its own benefits.
“It stabilises revenue, which is really important for a developer, especially as serviceability [of debt] is becoming more of an issue with banks and rising interest rates,” he said.
