A wave of build-to-rent apartments is expected to hit Australia mid-decade, with approximately 25,000 units projected nationwide.
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A new report by BIS Oxford Economics has revealed around 10,000 build-to-rent units are expected to break ground across Australia by mid 2023, with approximately 580 of those set for Canberra.
The report forecast the build-to-rent market would represent 10 per cent of national new apartment supply by the 2024-2025 financial year.
The build-to-rent model refers to large-scale, rental housing that is held in single ownership and professionally managed, as opposed to typical developments where dwellings are sold to individual owners.
Typically they are owned by institutional investors or the original developers who continue to manage the building.
Timothy Hibbert, head of property and building forecasting at BIS Oxford Economics, said the construction of build-to-rent apartments across Australia is set for a five-fold increase.
"It's a sector that's gone from pretty low volumes - we roughly estimated about 1000 [build-to-rent units] per annum ... based on all of our project tracking, we're expecting [unit] commencements to track closer to around 5000 to 5500 [per annum] over the next two years," he said.
The report stated tightening rental markets, support from some state governments and an influx of financing from institutional investors are contributing to the sector's momentum.
Canberra's steady rental yields, driven by the nation's highest median rents, are an attractive prospect for large investors.
"Canberra is an interesting market in the sense you've got quite a high median income, backed by stable public service employment," Mr Hibbert said.
"There's many aspects of the Canberra dynamic that looks favourable in terms build-to-rent, we believe."
In Braddon, a build-to-rent development launched last year on the corner of Lonsdale and Girrahween Streets, dubbed And Apartments. The six-storey building offers 31 rental apartments, plus 20 units for short-stay accommodation.
A number of larger developments have been proposed for Canberra in recent months.
Evri Group has submitted a development application for 430 build-to-rent units on Northbourne Avenue.
In October, Evri Group development manager Rob Speight said Canberra's nation-topping rental prices and low vacancy rates made it a suitable location for investment.
"We think that those metrics show that there's clearly a need for a relief on the rental sector from a supply and demand issue," he said.
Meanwhile, Capital Estate Developments have plans for a build-to-rent precinct in Molonglo Valley that would comprise of 700 dwellings once complete.
Located on Holborow Avenue in Denman Prospect, The Borough will be developed over three stages. The first two stages will include 370 dwellings across five buildings and is expected to be completed in early 2024. The final stage will comprise 330 units.
Earlier this year, developer HPI confirmed plans to convert its upcoming Amici development in Gungahlin to a build-to-rent model with 95 apartments.
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Amalgamated Property Group also plan to bring 154 build-to-rent apartments to the market by the second quarter of 2024, as part of the Oaks development in Woden.
The ACT government has previously stated its intention to explore build-to-rent projects in Canberra.
In November, the Suburban Land Agency undertook a market sounding process around the viability of the model, which looked at the appetite for developing build-to-rent projects and what incentives may be required to include an affordable rental component.
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