Australia’s build to rent (BTR) sector should experience growth in the medium to long term, driven by changing demographics, lifestyle expectations, and favourable regulation. James Kemp, Head of Real Estate, Asia-Pacific at Macquarie Asset Management, shares his insights.

The BTR development model has historically struggled to make ground in Australia. Recent changes in the market, however, are likely to spark a change in direction for the industry – potentially creating new property management opportunities.

What is BTR?

BTR is a relatively new idea in Australia, and this novelty has led to some misconceptions about BTR assets and their role in the property market.

So, what is BTR? Put simply, it’s a strategy that sees property developers retain ownership over the units they build, rather than selling them to individuals, as is normally the case. Tenants rent their apartment directly from the BTR developer, and each individual unit is held in single ownership and professionally managed.

This model has been proven in a number of foreign markets, most notably in the United States (US) where it’s known as ‘multi-family’ and accounts for 10% of the market. The BTR market has also been gaining traction in the United Kingdom (UK) and Japan in recent years.

In Australia, the market is in its early stages. There are currently 11 operational BTR developments around the country, comprising roughly 4,000 dwellings.1 A further 9,000 BTR units are under construction, with an additional 24,000 in various phases of the planning process.2

Who is currently renting BTR units?

Source: Macquarie Asset Management, 2024
Source: Macquarie Asset Management, 2024




“The BTR development model has historically
struggled to make ground in Australia.
Recent changes in the market, however,
are likely to spark a change in direction. ”

James Kemp

Head of Real Estate, Asia-Pacific
Macquarie Asset Management

The case for BTR in Australia

Australia’s BTR sector has lagged its international peers for several reasons, however market conditions are now shifting and the fundamentals look right for growth.

1. Tax treatment has been amended 

One major hurdle to BTR uptake has been the sector’s eligibility for Managed Investment Trust (MIT) status. Institutional property assets typically benefit from MIT status, meaning preferential tax treatment has been offered to foreign investors. This has mostly applied to industrial and commercial property, and for several years government and industry have debated whether BTR should be classified as residential property or be given MIT status (since BTR investors are primarily institutional). Last year, this issue was resolved and BTR projects were granted MIT status, removing a significant hurdle to foreign capital inflows.

2. Demand is rising, demographics are shifting

It’s no secret that Australia is undergoing a significant housing shortage. The National Housing Finance and Investment Corporation expects a shortfall of 106,000 dwellings by the 2026/27 financial year.3 Meanwhile, rents and house prices continue to climb.

To address these shortages, the Federal Government unveiled its National Housing Accord in recent years, outlining an ambitious plan to build 1.2 million new dwellings over five years starting from July 2024.4 This Accord is being supported by several institutional investors, super funds, developers and other associations. 

Even with the impressive array of financial backers for the plan, builders and researchers are warning the goal may not be achievable. Regardless of how the Accord plays out, the numbers and policy settings show real demand for new dwellings.

At the same time, the types of dwellings Australians are looking for are changing. People are waiting longer to cohabitate, get married or start a family – if at all. With these trends in play, many are spending longer in inner-city apartments closer to their workplaces and friends, before they consider moving to the suburbs. This is a demand gap that BTR is primed to fill. 

3. Existing BTR is proven

In a traditional development project, developers recoup their construction costs through the sale of individual units to private buyers. Given BTR developers retain ownership of the units they build, they need to find other ways to recover their construction costs.

Subsequently, rents on BTR units need to attract at least a 10% premium on comparable product within their neighbourhood to be viable. That spooked a lot of investors, who worried Australian consumers simply wouldn’t pay that premium even with the lifestyle benefits and amenities that are often baked into these projects. 

As more and more of these projects have become operational, those fears have been mostly assuaged. In some neighbourhoods these properties are attracting premiums of up to 20% on comparable product. What’s more, the market for these BTR apartments has proven to be much broader than investors initially predicted. 

In addition to that core market of young professionals looking for housing close to the city, existing BTR projects are seeing interest from young families trying to balance work and child-rearing, and even older downsizers selling their family homes to be closer to their children and grandkids.


Where are the current BTR units operating/planned?

Source: JLL, Q4 2023.
Source: JLL, Q4 2023.

Fundamentals look right for growth

These three factors – more attractive tax treatment, surging demand and demographic changes, and proof of development feasibility – have removed the brakes from the sector’s growth. 

As mentioned earlier, there are 11 operational BTR assets in Australia already with a combined total of about 4,000 units.5 Based on the experiences of similar foreign property markets, particularly the UK, we expect that figure to grow significantly in the medium-to-long term.

The UK is about 12 years ahead of Australia in terms of the evolution of this sector. It took the UK about 10 years to reach 1% BTR saturation. Translating this into the Australian market, we expect to see 100,000 to 110,000 operational BTR units across the country by 2034.

That number isn’t just based on UK growth rates, but also takes into consideration the total construction capability within Australia in the coming decade. Given labour and material constraints, it’s unlikely that Australia will build more than those 100,000 or so BTR dwellings within that time frame.

Consider your BTR offer

In many cases, BTR developers will try to keep property management services like leasing and maintenance in-house to keep a lid on costs and preserve the value of their properties. Apps and other digital interfaces are making this process much simpler for developers to handle, with tenants now able to register and apply for rental properties through one app, and even report maintenance issues and have repairs approved in real-time.

However, these in-house solutions are unlikely to be permanent fixtures of the industry. As the market matures and establishes itself, developers will feel more confident that they can outsource the property management function without undermining the value of their assets.

For agencies, this represents a huge opportunity to manage a significant number of premium properties, so long as they can demonstrate the capacity to do so while maintaining the level of service required to justify the higher rents being paid by tenants.

Five key takeaways about BTR

  1. The BTR market in Australia is led by of a handful of operators managing 11 operational assets with a steadily growing pipeline of new projects.
  2. There is ongoing and growing demand for apartment living around major cities, facilitating lifestyle and plugging demand gaps for housing.
  3. To help meet this growing demand, Australia’s tax laws have been amended to make it easier for foreign capital to fund BTR projects. 
  4. We expect to see as many as 100,000 BTR dwellings across Australia operational by 2034, up from about 4,000 today.
  5. As the BTR sector expands, we expect to see many opportunities for real estate agencies to service this market.

By James Kemp

Head of Real Estate, Asia-Pacific
Macquarie Asset Management 

To discuss any opportunities for your business, please speak with your Macquarie Bank Relationship Manager or request a call. 


Additional information


1 Local, EY Research, 2023
2 JLL Q4 2023
3 National Housing Finance and Investment Corporation, 2022-23
4 Office of the Prime Minister of Australia, 2023
5 Local, EY Research, 2023


This content was finalised on April 9, 2024.

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