BTR Australia, 2023: The Doors are Opening

A year of building openings and stabilisations against a backdrop of slow transactions. BTR 2023.

Going into 2023, the Australian Build to Rent industry was geared towards a slow start, with a highly anticipated second half.  Due to a number of global factors including inflation, higher rates/cost of debt, higher build prices and stubborn land values, the local market struggled to transact in a meaningful way.  This was very much in line with other institutional investment classes.

Falling swiftly in 2020, Australian rents have not only recovered from their pre-covid highs, but meaningfully surpassed them. This has been driven by a dramatic increase in Net Overseas Migration combined with a slow down in the creation of new housing supply.

The story of rents is nuanced and highly specific to location.  Melbourne CBD vacancy rates have hovered around 5.00% (Dec 2023 – SQM Research) whilst in Fitzroy they are 0.8% and Box Hill 1.8% – Very different rental sub-markets.

Throughout 2023, the macro fundamentals for Build to Rent have continued to improve.  Australia is experiencing world leading population growth leading to strong rent growth. There is very little housing supply in the pipeline with building approvals falling to their lowest points since near 2012. Thankfully construction costs appear to be plateauing. Global cash rates appear to have reached their peaks and we could see some transactional evidence for cap rates in the Australian market in 2024, hopefully.

So what happened in 2023

The 2023 BTR deals:

  • Sentinel locked in significant funding from Dutch pension fund PGGM (Total investment A$1.5 billion) and acquired two new projects, one on the Gold Coast (c. 300 units) & the other at Villiers St, North Melbourne (c. 350 units).
  • Lendlease entered the market with the announcement of partnerships with Daiwa House (Japan) & Quadreal (Canada) for their Melbourne CBD (797 units) & Brisbane Showgrounds projects (443 units), respectively.
  • Hines found the backing (Aud$1.5bn) of one of the largest Multifamily investors globally through Cadillac Fairview (Canada) and pursued Bank Street, South Melbourne (355 units).
  • Greystar acquired a site in Zetland (c. 182 units) and another in Collingwood with UEM Sunrise (400 units).
  • Home acquired a new project on Queens Rd, Melbourne (560 units) and subsequently submitted for town planning.
  • Mirvac raised platform funding for their $1.8bn Liv platform through the CEFC & Mitsubishi (Japan).
  • Novus acquired Bowen Cr, South Melbourne (215 units) & a second Chatswood (NSW) project (257 units).
  • Super Housing Partnerships (SHP) launched an affordable housing/Build to Rent fund with Australian Super & Hesta.  A welcome entrance from another Australian Superannuation Fund.
  • AXA IM Alts acquired a forward funded project with Deicorp in Westmead (400 units), partnering with St George CHP to manage the significant proportion of affordable housing.
  • Cedar Pacific launched a fund-raising campaign for their BTR platform.
  • Barings (Prev. Altis Partners) have moved into Canberra with the acquisition of Dickson Village (140 units) on behalf of Aware Real Estate.
  • Local South Melbourne (Forward Fund) started construction & they also teamed up with Golden Age in Box Hill (425 units) for a turn key investment.
  • Tetris Capital, alongside Icon Kajima & CHL as the CHP, was awarded the Ground Lease Model Stage 2 as their second PPP with the Victorian State Government for approximately 1,400 units in a blend of Social, Affordable and Market rent housing through the 40-year landlease project.
  • The Federal Government announced significant programs to support Affordable and Social Housing through the HAFF & NHAF.

Operating BTR Projects:

2023 saw the evolution of the local BTR market through the opening of a number of BTR projects, largely in Victoria. The market now has 19 operating buildings (5,398 Units), this is providing much needed operational data and surety to the market.  We are also starting to see projects come to market on retail sale, hopefully we see more of this in 2024.

Key BTR Projects Currently Operating:

  • Realm Caulfield, VIC.
  • Realm Kangaroo Point, QLD.
  • Mirvac Homebush (Liv), NSW.
  • Mirvac Munro (Liv), VIC.
  • Home Southbank, VIC.
  • Home Richmond, VIC.
  • Sentinel, The Briscoe, West Melbourne, VIC.
  • Sentinel, The Elements, WA.
  • UBS, The Smith Gold Coast, QLD.
  • Arklife, Roberston Lane, QLD.
  • Suleman, Union Quarter, VIC.
  • Aware Real Estate, Dickson Village, ACT.
  • Pellicano, Multiple.
  • Montague Square, VIC.

For further information, the Franklin St. Q1 2024 BTR State of the Market provides an overview of whats driving the local market.

Planning Changes


A new facilitated assessment pathway has been introduced for significant residential development with affordable housing. This involves a fast-track planning assessment pathway now available.

These changes position the Minister for Planning as the responsible authority for determining applications by fast tracking a range of residential development proposals.

Development Facilitation Program

Expediting planning approvals for significant residential projects that will increase affordable housing.

This amendment seeks to facilitate the renewal of public housing stock in a number of categories, as follows:

  • Category 1 – Developments with a construction cost of over $50 million in metropolitan Melbourne or $15 million outside of metropolitan Melbourne.  Those which provide at least 10% of the total number of dwellings as affordable housing.
  • Category 2 – Projects carried out by, with, or with funding from the State or a public authority which provide at least 10% of the total number of dwellings as affordable housing.
  • Category 3 – Projects considered by the Minister for Planning to be significant, having regard to considerations including the percentage of dwellings proposed to be affordable housing, the location of the development in relation to jobs, services, infrastructure and community facilities, and exemplary design.

Activity Centre Planning Controls

Ten activity centres have been identified for reformed planning controls to deliver an additional 60,000 dwellings. These centres are well serviced by existing and proposed infrastructure and have untapped capacity to support more intensive development and population.

The 10 Activity Centres include – Broadmeadows, Camberwell Junction, Chadstone, Epping, Frankston, Moorabbin, Niddrie (Keilor Road), North Essendon, Preston (High Street) and Ringwood.

New South Wales

NSW Government

The NSW Government announced a State Environmental Planning Policy (SEPP) introducing housing reforms to make it faster and easier to build more affordable housing.

The reforms introduce a new bonus Floor Space Ratio (FSR) of up to 30 per cent and a height bonus of up to 30 per cent where a proposal includes a minimum of 15 per cent of the gross floor area (GFA) as affordable housing.

These bonuses are available for build-to-rent developments, by allowing them to apply in commercial zones, even if residential accommodation is prohibited under the relevant Local Environmental Plan.

Sydney Council – BTR Permits

The City of Sydney Council recently endorsed changes to planning and development rules to encourage more build-to-rent housing and family-friendly apartments, while improving sustainability and design excellence.

Under the changes, developers would be given between 20 and 75 per cent more floor space for build-to-rent development for both conversions and new builds, depending on the site location.

This would apply to applications made within a five-year time frame from when the changes are formally approved.


The Brisbane Build-to-Rent Incentive Policy (the policy) will support the delivery of large-scale multiple dwelling developments in appropriate locations approved by Council.

For eligible developments, Council will enter into an Infrastructure Agreement under the Planning Act 2016 to defer the payment of the infrastructure charges for up to 5 years for the build-to-rent component of the development. The deferred charges are to be paid in annual instalments following the commencement of use for the eligible development.

Reduced Infrastructure Charges

  • Reduced infrastructure charges – Up to 100 per cent for the providers of community housing – have been adopted by Brisbane City Council to drive down the price of units.
  • The council would waive developers’ infrastructure fees to the tune of 50 per cent, 75 per cent and 100 per cent depending on the type of housing they are building and when their plans were approved.

Australian Tax Office & Federal Grants

Changes to Tax Regulations

In April 2023, the Australian Government announced that it would provide incentives to increase the supply of housing in two ways.

  1. Reducing the withholding tax rate on eligible BTR funds from 30% to 15% to be inline with other commercial asset classes.  This measure is set to apply from 1 July 2024, however the detail is scarce and the amendment has not yet been gazetted.
  2. Increasing the capital works tax deduction depreciation rate for eligible new Build to Rent projects from 2.5% to 4% per year, shortening the depreciation period from 40 years to 25.

Further information can be found at the ATO website.

Queensland & Western Australian State Governments

Amended Land tax rules to be inline with Victoria, New South Wales & South Australia providing a 50% land tax exemption for Build to Rent projects meeting specific criteria.

The Property Council of Australia provides a great summary of the current tax settings for Build to Rent in Australia.

2024 – The year of Build to Rent…

With the major headwinds of 2023 subsiding, rental growth and housing demand increasing, Franklin St. are optimistic for 2024.  This could be the year that Build to Rent really matures.

The market is still in its infancy, however with operating assets providing live data to new investors, valuers and developers alike, the market is waiting patiently for live transactional evidence.  The sale of an operating asset will provide the market with much needed assurance, and we hope to see it occur in 2024.

Franklin St.

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Working end to end across the industry, Franklin St. can unlock Build to Rent for you.  Through design, implementation, feasibility and funding.  Get in touch.