Since global real estate developer and management company Greystar announced the scale of its first Build-to-Rent (BTR) project in Melbourne, attention has now turned to Sydney and Brisbane as they seek to expand their rental housing development projects in these two cities.
Greystar unveiled plans for their $500 million BTR project in southern Melbourne this Wednesday, which is expected to open to residents in September this year. This new project consists of three towers and will offer 700 brand-new rental apartments, managed by Greystar, with an eventual occupancy of approximately 1,500 residents.
This development project in south Melbourne will be Greystar's first BTR project in Australia. Previously, they have also undertaken other BTR projects in suburban areas such as South Yarra, Kensington, Fitzroy, and Collingwood in Melbourne.
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Sean Ryan, Senior Director of Greystar's Development Division, revealed that the company is actively seeking new opportunities on the east coast, with a focus on cities like Sydney and Brisbane. He stated, "We are actively looking for more products." He added, "We are focused on the east coast of Australia, so not only in Melbourne but also in Sydney and Brisbane. We are actively seeking development."
This initiative is based on the increasingly challenging situation in the Australian rental market. According to data from PropTrack, Australia's latest rental vacancy rate was 1.07% in February, while rental affordability reached its lowest level in at least 17 years.
According to data from the Victorian Government, Melbourne completed approximately three-quarters of Australia's BTR projects last year, accounting for 73% of the total number of BTR apartments in Australia. Victoria's Minister for Planning, Sonya Kilkenny, stated that Melbourne is the BTR capital of Australia.
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She said, "Thanks to our planning and tax reforms, Victoria leads the nation in 'build-to-rent,' and we will continue to do everything we can to build 800,000 different types of homes in the next decade." She also emphasized the importance of the development project, stating that it will provide rental housing close to transport, schools, parks, and the iconic Yarra River.
According to real estate consulting firm Charter Keck Cramer, Melbourne completed 580 BTR apartments last year, with approximately 18,200 apartments under construction or approved for planning.
However, although Greystar has made some progress on BTR projects, Mr. Ryan stated that their expansion plans still depend on whether they can obtain sufficient financial support for more projects. He said, "Our capital is in place and implementing such projects, and over time, we will truly begin to intensify our search." He also mentioned that compared to international markets, returns in Australia are lower, so continuous government support is needed to attract more capital into Australia.
To attract more overseas investors to participate in rental housing construction, the Australian federal government has announced tax reforms for Managed Investment Trusts (MITs) from July 1 this year. This reform will reduce the withholding tax rate paid by eligible funds from 30% to 15%. Mr. Ryan stated that changes in taxation and planning will incentivize more investors and developers to build more rental housing.
