In 2019 I started, together with some partners, to focus on, research and analyse the trends we were seeing in the worldwide Build to Rent (BTR) market and whether it could be applied in the Australian context.
We believe that through luck and hard work we’ve ended up in the middle of the biggest real estate opportunity that exists today.
Low-interest rates, coupled with the enormous injection of stimulus (aka money) into the system due to the pandemic, have created a tsunami of new liquidity flooding worldwide into hard assets such as real estate.
We have seen this in residential real estate prices around the globe in 2021.
For BTR there’s timing - there’s location – there’s demand and liquidity.
So let’s find out why we’re so excited.
But first, let’s see what is happening in the BTR market in the US, and whether we will see such trends follow in Australia.
Let’s start with demand.
Significant amounts of research indicate that the Build to Rent market is seeing the greatest supply-demand imbalance in US real estate history.
Through the 18 months to the end of 2021 about 30 Build to Rent funds have raised huge amounts of cash.
US$60 to $75 billion in unleveraged cash means that these funds will need to either build or buy over $150 billion in assets in the coming few years.
The final number could be as high as $300 billion dollars.
And it seems that the total BTR product supply that’s coming online in the next 2 years is a tiny fraction of the $150 billion that needs to be spent.
And that leads many to believe that these billion-dollar BTR funds will be forced to take extraordinary measures to spend this mountain of money.
And when so much money chases so few assets, prices spike and cap rates (also referred to in residential property as rental yields) plunge.
Industry professionals predict that some of these BTR funds will simply not find any properties, and they’ll be inclined to buy the future unbuilt pipelines of existing BTR developer’s stock.
In the US, builders, who could not build enough houses to meet demand BEFORE the pandemic, will need years to create enough supply to match demand.
The magnitude of the housing shortage in the US is reportedly very severe.
BY several estimates, from 2001 through 2020, 1.3 million houses needed to be built annually, but builders could only produce 947K houses. That left a shortfall of 353,000 houses a year for 20 years.To
Just to get back on track and meet future demand plus the shortfall, builders would need to produce 2.5 million houses a year, or more 2.6X their previous production!
This once-in-a-lifetime imbalance has caused home prices to increase rapidly in the US, creating a lucrative window of opportunity for Build to Rent real estate investors there.
Will Australia follow?
Consider that in 2022 the Government will issue nearly 200,000 migrant visas, and there was 160,000 students locked out of Australia in 2021 due to the pandemic.
And then added to those figures is returning Aussies.
Many of these will be looking for rental accommodation, the majority in our major cities.
In December 2021 SQM Research figures showed that there just 55,000 vacancies for properties to rent, across the whole country, down from the mid-2020 peak of 88,000.The national rental o
We also have the coming supply crunch of apartments in Australia.
All of which leads us to an inescapable conclusion:
BUILD TO RENT IS COMING TO AUSTRALIA FAST AND IN A BIG WAY.
In fact, it represents possibly an AU$88 Billion property opportunity.
Visit this LINK to read about the $88 B opportunity, and download a copy of the Build to Rent report below.
In preparing this website Citylife International Realty Limited ("The Company") has relied upon information provided by the various partners and information that is publicly available. The material on this website has been prepared for informational purposes only should in no event be construed as a solicitation or offer; as investment, legal, tax or other advice; or as a recommendation to buy, sell or engage in any transaction whatsoever. Offers to sell, or the solicitations of offers to buy, any security can only be made through official offering documents that contain important information about risks, fees and expenses.