Vertical Communities

AUSTRALIAN PROPERTY INSIGHTS

VERTICAL COMMUNITIES

CHART 11

RETURNS ACROSS SECTORS

Office

Industrial

Retail

BTR

Yield

6.25% 2.50%

5.50% 3.50% -95bps

7.00% 2.00%

4.50% 4.50% -40bps

Growth Rate (10-yr)

Leakage

-300 bps

-200bps

Unlevered IRR

5.75%

8.05%

7.00%

8.60%

Source: Cushman & Wakefield

Leakage includes vacancy, incentives, CAPEX, transaction costs.

PLATFORM FORMATION DRIVING DEPLOYMENT To gain exposure at scale, many institutional investors shifted away from asset-by-asset investing toward platform formation. These structures – typically in the form of joint ventures, co-investments, or seeded portfolios – are enabling capital to secure pipeline visibility, reduce deployment risk, and influence operational strategy. However, single asset deals have been more prevalent over the past 24 months, reflecting liquidity challenges but we expect the emphasis to move back to platform. Owner-operator models have been the most prominent structure, allowing stronger alignment between leasing, brand, and income strategy. Platforms such as Mirvac’s ABTRC, Greystar, Home (GIC), and Oxford are vertically integrating to control both development and operations. This alignment enhances efficiency, supports OPEX control, and reinforces brand equity. Platform strategies also support standardisation and scalability, allowing institutional managers to build pipeline across multiple markets with consistent governance, design, and service quality.

LIQUIDITY, INDEX INCLUSION, AND THE ROAD AHEAD

Liquidity remains the most frequently cited risk for BTR investors – especially those constrained by exit requirements or secondary market availability. With few stabilised BTR assets trading to date, underwriting exit assumptions continues to require a degree of conviction. This lack of historical depth is one of the final hurdles to full institutional acceptance. However, the sector’s inclusion in PCA/MSCI benchmarking is expected to materially improve transparency and valuation confidence. As more assets reach stabilisation and begin to trade, investor benchmarking and yield setting will become increasingly robust. Over time, this will drive deeper institutional penetration.

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CUSHMAN & WAKEFIELD