The number of build-to-rent (BTR) units delivered across Australia is set to reach a new high in 2025, but momentum may falter beyond this year, realestate.com.au reported.
Knight Frank’s latest Build to Rent Update shows 6,000 new BTR units are expected to be delivered this year, up from 4,660 units across 18 projects in 2024. That compares to fewer than 2,000 completions per year on average across the five years prior.
BTR, a model in which developers build multi-unit complexes and retain them as rental stock, has become increasingly popular with tenants seeking secure leases and modern amenities.
Despite record delivery this year, Knight Frank warns the development pipeline is thinning.
Just 4,000 units are forecast for 2026, with feasibility challenges and high input costs weighing on new commencements.
According to John-Paul Stichbury (pictured left) of Knight Frank’s valuation and advisory arm, maintaining momentum will require policy and investor support.
“As well as an improvement in the macroeconomic environment, supportive government policy will also be vital for the long-term pipeline,” Stichbury said.
“A consistent pipeline of new project commencements is needed to ensure that the recent slowdown is only a short-term blip, and central to this is the ability to activate the pool of approved schemes.”
By Knight Frank’s estimates, around 20,500 DA-approved BTR units sitting in the pipeline remain unfinanced and uncommenced.
Policy uncertainty is adding further risk to the pipeline.
The Property Council has warned that Coalition moves to block federal build-to-rent tax concessions could jeopardise 80,000 new rental homes – including 8,000 affordable dwellings – during what it calls a critical phase of the housing crisis.
CEO Mike Zorbas labelled the move “wrecking ball policy,” stressing that Australia is building homes half as fast as in 1995 and already 70,000 homes a year behind target.
Tim Holtsbaum (pictured right), head of alternatives at Knight Frank Australia, said tax and policy settings remain a key barrier to new investment.
“The BTR tax environment in Australia is hard to navigate and a more uniform approach across states would be beneficial,” Holtsbaum said.
He welcomed last year’s government concessions for foreign managed investment trusts but warned: “Tax on foreign investors remains problematic and decreasing this burden for institutional investors from abroad will help to increase Australia’s competitiveness with other countries, where the barriers to entry from a tax perspective are typically lower.”
Holtsbaum added that while global investors are scaling up their exposure to living sectors, Australia risks losing ground unless policy improves.
Despite pipeline risks, BTR assets continue to perform strongly.
“As global investors scale up their exposure to the living sectors, more entrants are expected to enter the market as the sector is maturing,” Holtsbaum said.
He noted that high occupancy and steady rental growth remain key strengths of the sector.
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