Vertical Communities

AUSTRALIAN PROPERTY INSIGHTS

VERTICAL COMMUNITIES

OUTLOOK & RISKS

The long-term outlook for BTR in Australia remains structurally positive. BTR is positioned to emerge as a necessary complement to traditional development models.

Several key trends are reinforcing momentum: • Policy support: Recent tax and planning reforms have created a more level playing field, enabling institutional capital to underwrite BTR with greater confidence. • Capital formation: Investors are forming vertically integrated BTR platforms, with owner-operator models improving alignment between asset performance, leasing strategy, and resident experience. • Rental fundamentals: Persistently low vacancy rates, limited new supply, and strong population growth are expected to underpin rental income growth across key metro markets. Against this backdrop BTR is poised to shift from a niche to established asset class.

Despite strong fundamentals, these risks could slow BTR’s trajectory: • Planning and feasibility: Delays in local approvals, high construction costs, and site acquisition challenges continue to weigh on project feasibility – particularly with projects facing tight margins. • Pipeline execution: Many projects in the national pipeline are early-stage or dependent on third-party capital and permitting. Delivery delays, capacity constraints, and construction bottlenecks could affect project timelines. • Policy inconsistency: State support for BTR remains uneven. Inconsistent application of land tax relief, planning mechanisms, and concessions creates additional headaches for investors with cross-jurisdictional strategies. • Liquidity and exit: With few stabilised BTR assets trading to date, there is limited visibility on secondary market pricing. This presents challenges for underwriting exit assumptions and may inhibit capital scaling until more transaction evidence emerges.

Novus on Sturt, Melbourne

CUSHMAN & WAKEFIELD