PHOTO: Photo by Felix Haumann: https://www.pexels.com/photo/park-near-modern-building-during-daylight-3626248/
The general housing market activity in Melbourne was negatively affected by the lockdowns of 2020 and 2021, but now the overall house prices are falling. That said, rental rates are noticeably going up due to vacancy rates in Melbourne areas being historically low.
What’s happening with the rental market?
According to data from SQM Research and Dr Andrew WIlson, unit rent has increased 23.3% in the past year while unit vacancy remains at a mere 1.7%, creating a bottleneck in rental housing supply.
The low vacancy rate can be attributed to the combination of two factors: the growing population and the strong job market. 86% of Asutralians lived in urban areas in 2021, according to the World Bank, and the number is poised to keep growing. The influx of people moving into the city for better job prospects and quality of life drives fierce competition between renters.
While such a drop in vacancy rates indicates a strong economy, it is increasingly a headache for the people who make that economic growth possible in the first place. Enter the hot new rental model taking Melbourne by storm.
The single-stroke solution to the rental bottleneck
It’s called the build-to-rent model and is a rapidly booming sector of property development. This model entails developers building high-density rapid projects with the one purpose of renting out the units. This is a dramatic departure from the traditional model where newly built units were sold to investors or homebuyers.
The BTR format has been rapidly growing over the past few years, and Melbourne is steadily the centre of developments. Pellicano, Mirvac, and other major entities have entered into managing numerous BTR projects which are steadily coming online.
These developments revolutionise finding affordable apartments in Melbourne CBD and other areas. Build-to-rent complexes feature a high value for their market price. Residents receive many attractive services such as cleaning, pet minding, regular comprehensive maintenance, and more, all in-house.
Perhaps the most attractive feature of BTR units is that the leases are long-term as a rule. It is a uniquely stable supply of secure housing solutions. Renters can dispense with the worry of how long they might remain the unit and how much they will have to pay over that uncertain time.
This new rental model could become the primary answer to the population-to-housing ratio crisis which Australia might face in the near future. Projections from the Australian Bureau of Statistics predict that Australia’s population will reach between 37.4 and 49.2 million by 2066 and renters make up a rapidly growing proportion of the overall population. BTR projects exponentially increase the rental accommodation supply to match the fast increase in demand.
The biggest players on the BTR field
There are several companies and institutional investors participating in the BTR developments. Some of those projects are international as well.
For example, the United States-based Sentinel Real Estate Corporation a.k.a. Sentinel Corp has launched “Element 27” in early 2019. This was the first 100% rental apartment community in Australia. It’s located in Subiaco, Western Australia.
Likewise, a global leader in real estate investment, successfully launched Realm Caulfield in Melbourne in November this year. Realm Caulfield is a continuation of their BTR projects in Australia, preceded by Realm Kangaroo Point in Brisbane.
Why is BTR so efficient?
In short, because it caters to a wide array of needs in a record short time span. Not only does a build-to-rent project entail many rental units online at once, it typically features different unit formats within a single project.
Typically, a BTR complex will include a mix of several studio apartments, penthouses, and one-, two-, and three-bedroom units. As such, each complex can accommodate renters in various circumstances.
In conclusion, Melbourne is definitely seeing a major increase in build-to-rent investments, and this is an amazing opportunity for the city. BTR complexes rapidly contribute to the dwindling supply of affordable rental units. They account for various living arrangements and guarantee professionally managed, high-quality accommodations with long-term security.
Great amenities on top of all that are sure to attract even more people, whether long-time residents or fresh arrivals to Melbourne. With the housing bottleneck thus resolved, the Melbourne community can focus on economic development and quality life for themselves and their families in 2023 and onwards.
MOST POPULAR IN NEW ZEALAND
- Model, Actress, Basketball freak and a Transgender real estate agent too | WATCH
- Real Estate agency keeps $100k in bond payments for itself
- Claims about Jacinda Ardern’s wealth
- Property investor charged with fraudulently obtaining millions of dollars in home loans
- AUSTRALIA: Inside the sad downfall of the once mighty David Jones
- New Zealand’s 2022 property market downturn deeper than predicted | CoreLogic
- Abandoned land for sale
- PGG Wrightson Real Estate acquires rival real estate company
- AUSTRALIA: Inside the creepy property where teacher, his brother and sister-in-law, set up ambush before they murdered two police officers and an innocent neighbour
- Grand Designs NZ build up for sale