Vertical Communities

AUSTRALIAN PROPERTY INSIGHTS

VERTICAL COMMUNITIES

CAPITAL MARKETS

STRONG INSTITUTIONAL APPETITE, LIMITED PRODUCT According to ANREV’s 2025 investment intentions survey, residential real estate is now the most preferred asset class in the Asia Pacific region – cited by 91% of investors, up from 74% in 2023. This rising focus reflects a growing recognition that BTR offers core-like income, downside resilience, and long-term demographic alignment. In Australia, this momentum is supported by tax reform, index inclusion, and early platform performance. Superannuation funds, global pension capital, and real estate managers are actively expanding mandates to include BTR as part of their residential and real asset strategies. It is within this context that Cushman & Wakefield advised on the recent cross-border partnership between Novus and Japan’s Kaden Realty & Development for the delivery of Novus on Spencer in Melbourne, a 190-unit purpose-designed BTR development. This transaction underscores how foreign capital is increasingly backing the Australian BTR sector, providing confidence in the long-term fundamentals of this emerging asset class. BTR also naturally sits with the ESG focus of many institutional investors. It serves an undersupplied key societal requirement – rental housing. It should also align investor and occupier interests as applying higher quality ESG standards to the design, development and operation improves tenant retention and asset resilience.

Yet despite this interest, investable product remains scarce. With relatively few stabilised BTR assets available, most capital is being deployed though development-led mandates, forward-fund structures and recapitalisations. Several offshore groups have also opted to invest in local platforms from the ground up – a strategy that allows greater control but requires longer deployment horizons. This supply-constrained environment is reshaping how capital approaches the asset class. Investors are increasingly willing to assume development risk or enter at earlier project stages, particularly where alignment with operating partners is strong. However, underwriting remains cautious with investors drawing comparisons with other sectors to build comfort. Market participants continue to cite liquidity and scale as headwinds constraining broader institutional adoption.

What Investors Should Watch: • Platform formation driving pipeline depth • Benchmarking via MSCI/PCA to improve pricing visibility • Absorption rates key to income stability • Planning certainty crucial for scale feasibility

CHART 8

ASIA PACIFIC PREFERRED INVESTMENT INTENTIONS

100%

80%

60%

40%

20%

Residential

Logistics & Industrial

Oce

Retail

Student Accommodation

Development

Healthcare

Other

Source: ANREV 2025 Investor Survey

CUSHMAN & WAKEFIELD