Build to rent (BTR) is a real estate development model where a property developer constructs a building or complex of units with the intention of renting them out to tenants. The BTR model is gaining popularity in many cities, including Parramatta, due to the growing demand for rental properties and the need for more affordable housing options.
In Parramatta, BTR projects typically involve the construction of large apartment complexes with numerous units available for rent. These complexes are usually located in areas that are close to public transport, shopping centres, restaurants, and other amenities.
The Urban Property Group are the latest company to file for a development application with the BTR model. A 393-apartment tower has been filed at 204 and 205 Fitzwilliam and Argyle streets next to the Parramatta Train Station. Designed by SJB, the group secured the site from Transport for NSW to add a large mixed-use BTR tower into the expanding Parramatta corridor.
These BTR projects in Parramatta are designed to provide high-quality rental housing for tenants, with features such as modern appliances, shared amenities (e.g. gyms, swimming pools), and 24/7 security. The aim is to create a sense of community among the tenants, with events and activities organized to foster social interaction.
One advantage of BTR projects for tenants is the security of knowing that they are renting from a professional landlord who is committed to providing high-quality housing and services. Additionally, BTR projects often offer longer-term leases than traditional rental properties, giving tenants more stability and security.
For developers, BTR projects can provide a stable income stream, with the potential for long-term rental income and a higher return on investment compared to traditional residential property development. Hence, Build to Rent continues its growth around Australia.
One of the main funding problems with build-to-rent (BTR) in Australia is that it has not been considered as an asset class by institutional investors until recently. Traditional investors such as superannuation funds have been reluctant to invest in BTR because it has not been perceived as a mature or stable asset class like commercial or residential property.
As a result, BTR developers have struggled to secure the long-term financing needed to construct these projects. This has led to a reliance on short-term debt and equity funding, which can be expensive and can limit the scale of projects that can be undertaken.
Another challenge for BTR developers is that there are limited government incentives or policies that specifically support this type of development. Unlike other countries such as the UK and the US, where government incentives such as tax breaks and planning exemptions have encouraged the growth of BTR, Australia has been slower to adopt such policies.
Furthermore, Australia’s complex tax and regulatory system can create barriers for BTR developers. For example, the Goods and Services Tax (GST) treatment of BTR projects can be unclear, and state and local government planning and approval processes can be time-consuming and costly.
To address these funding issues, the Australian government has recently introduced some measures to encourage BTR development. For instance, the National Housing Finance and Investment Corporation (NHFIC) has introduced a $1 billion facility to support the development of affordable housing, including BTR. Additionally, the New South Wales government has announced a range of initiatives, including a $250 million loan scheme for eligible BTR projects.
Build to Rent continues its growth in Australia and BTR projects look a model that is here to stay. These projects being added into Parramatta are an innovative solution to the increasing demand for rental housing, providing high-quality housing options for tenants while also offering a profitable investment opportunity for developers.
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