Build-to-Rent development pipeline grows

Andrew McCasker, Pacific managing director of CBRE’s Debt & Structured Finance business, commented that the ability to secure favourable debt financing terms remained a critical enabler for BTR projects.

Build-to-Rent development pipeline grows
Build-to-Rent development pipeline grows

Australia’s Build-to-Rent (BTR) pipeline has expanded by 68% over the past year, with 40 projects seeing the total number of units approaching 15,000.

Offshore institutional funding accounted for 57% of the total pipeline.

Melbourne leads the way with its development pipeline representing over 50% of the national market, while Sydney accounts for approximately 25%.

Andrew McCasker, Pacific managing director of CBRE’s Debt & Structured Finance business, commented that the ability to secure favourable debt financing terms remained "a critical enabler for BTR projects."

“It is encouraging to see new dedicated products tailored to this market, with larger allocations of capital being made by both traditional lenders, the big four Australian banks, as well as non-bank lenders such as insurance groups, private equity and private credit funds,” Mr McCasker said.

“We expect funding appetite to increase as the asset class, and knowledge of the industry, evolves and matures in Australia.”

As the pipeline continues to expand, the aggregate size of the market is currently estimated to exceed $10 billion, with an additional $3-5 billion in projects currently under consideration or at various stages of due diligence.

CBRE noted there was a 28% increase in new projects in the second half of last year relative to the first six months of 2020.

Of the 10 projects announced in the past seven months (totalling over 3,300 new units), six were secured by sponsors who already had one or more investments in BTR in Australia indicating increasing levels of interest.

At present, 11 groups are currently developing more than one project and have committed significant resources to the sector.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

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Build-to-Rent Melbourne

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