NSW Expands Build-to-Rent Market to Attract Investments

The growing build-to-rent (BTR) market in NSW is expected to attract significant investment, with the state overtaking Queensland in its development pipeline. However, challenges in construction costs and government policy continue to impact the sector's growth.

Australia currently has approximately 8,900 BTR apartments under construction, with an additional 20,000 units approved for development in the next five years. Overall, the country has seen 19,308 units completed or in progress since 2018, with another 40,191 planned but still awaiting approval.

Victoria remains the most advanced state for BTR developments, with 11,098 units completed or under construction and 14,440 more in the pipeline. However, NSW is catching up quickly, with 15,089 units in total—3,584 completed or under construction and 11,505 in planning—surpassing Queensland's total of 14,390 units.

Experts note that Sydney is gaining traction as investors expand beyond Melbourne, driven by opportunities to diversify across Australia's eastern seaboard. Brisbane, meanwhile, struggles with acute development challenges, which could result in slower growth for the city despite high rental demand.

The BTR sector received a boost recently with legislative reforms on tax policy, which signal federal government support for this growing housing model. This change is likely to increase interest from foreign investors while domestic funds remain hesitant. Market players like Lendlease, Apt. Residential and Scape have already secured capital for major BTR projects in Melbourne and Sydney this year.

Despite short-term challenges, including construction cost inflation and macroeconomic uncertainties, experts suggest that stabilising costs and new policy settings could support future growth. Rapidly growing rental demand and the sector’s defensive nature amid high inflation make BTR an increasingly attractive option for investors.

Sources: DWS Group, The Australian, Franklin St