Institutional investment in residential real estate is nascent but growing in both Australia and the United Kingdom (UK). This paper brings to light the reasons underpinning the growth of the build-to-rent (BtR) sector in both countries, situating industry knowledge in global and local contexts. By exploring investment decision-making and industry views on risks and returns, it identifies key drivers of and impediments to continued market growth.
A qualitative approach was taken, interviewing 33 individual industry experts across Australia and the UK – consultants, planners, policy makers, BtR investors, developers and operators – to assemble diverse perspectives on the creation, growth and prospects of the institutional BtR market. The research focussed on Glasgow and Manchester in the UK, and Sydney and Melbourne in Australia, reflecting diverse stages of urban market development.
Institutional investment in BtR in both countries is seen by industry actors as responding to parallel domestic trends of reduced rates of owner occupation and a growth in private renting, against structural shifts in office and retail markets. International capital plays a pivotal role, and a vertically integrated development model prevails that reflects the heightened importance of operations within BtR as compared to commercial sectors.
Institutional investment in residential property is expected to grow in both Australia and the UK. This research sets out to advance market knowledge by bringing together prevalent investment rationales in two BtR markets at varied, incipient, but fast-growing stages of market development. It provides insight from varied market stakeholders and lessons on the potential for both enabling further BtR development and overcoming perceived market impediments. A cross-border analysis also helps knowledge transfer and contributes to better practice internationally.
The paper offers insights from industry stakeholders on BtR investment in markets where the private rented sector for housing has lain dormant but is now rapidly growing. Implications for investment decision-making are drawn out to address the present lacuna of investment-focussed research on BtR.
