5 Build-to-Rent Trends in 2024 to Get Excited About

A build to rent community with parkland around the apartment building

It may seem like a lifetime ago, but COVID-19 shook up more than our work-from-home situation. It accelerated the planning of Built-to-Rent units in Australia. A healthy 3,000 units were added to the pipeline in 2020 and more than 7,000 are expected by the end of 2024. But there’s a host of other changes influencing Build-to-Rent trends for 2024.

New South Wales and Victorian governments introduced significant land tax discounts for BTR developments in mid-2023. Other investments are now pouring in which will further stimulate the sector. It will go some way toward meeting the increasing demand we’re seeing for BTR developments. Then there’s the impact of AI, more policy changes and an expected spike in immigration. Read on for our forecast of Build-to-Rent trends in 2024 you should be watching.

#1 Expect rapid growth in the sector in response to the Aussie housing crisis

The Australian dream has been changing. Combine that new dream of community living with a growing housing crisis and BTR developments are the obvious solution. We’ve mentioned it before, and this year we’re expecting it to ramp up considerably. That’s why it’s our #1 for Build to Rent trends in 2024.

A growing portion of Australians aren’t able to buy or rent a home. That’s because wage growth has been slower than inflation, a situation that is expected to turn around by mid-2024. A shortage of affordable housing, low wage rises and an uptick in immigration have worked together to create a stronger demand for housing than ever.

Although the BTR sector in Australia is in its infancy, compared to the US, UK or Europe, that’s about to change. And change fast. Less than 0.5% of housing stock in Australia is BTR. The US boasts around 12% of BTR for housing stock and the UK 5.4%. As governments scramble to address our housing crisis, incentives such as discounted land tax, an increased tax deduction for capital works, and an exemption from the foreign investor land tax surcharge are making BTR ventures more attractive. That will translate to rapid growth.

#2 Expect increased demand for BTR

We briefly mentioned it above, but demand for housing is higher than ever. Many of us are looking for rental communities rather than traditional homes on quarter-acre blocks.

It’s not just the under-40s either. Many empty-nesters look for a lifestyle change when the kids move out. BTR is a viable and appealing alternative in this demographic to retirement communities. Community lifestyles are becoming more attractive to young and older generations across the country because they offer convenience, community and connection with the people, activities and places that bring them joy.

Immigration is also adding to the demand for BTR, further strengthening our decision to place this BTR trend for 2024 in our #2 spot. Migrants are less likely to live in rural or regional areas than Australian-born residents. Our 2016 Census showed that 83% of immigrants chose one of Australia’s major cities to call home. There are more employment opportunities and chances to meet people from their own cultures.

As most BTR developments are planned for urban areas, the expected spike in immigration, combined with the growing number of young and old looking for community lifestyles will increase the demand for BTR developments.

#3 BTR trend in 2024: government policy support for BTR developments

Of course, there’s the 50% land tax discount for BTR developments in NSW and Victoria which has spread to SA, Queensland and WA too. And the exemption from foreign land tax surcharge will attract overseas investors.

Tax concessions for Depreciation Rate Increases (DRI) and a reduction in MIT withholding tax, combined with an expansion of the concessional rate for clean building MITs are making BTR developments even more attractive to developers. The Australian government is enticing property developers to give a hand with the housing crisis. These policy changes will go a long way to making BTR development investments more robust.

Of course, as with most government policy changes, there are stipulations for eligibility. A certain percentage of BTR developments must be designed for affordable housing. Sustainability and classes of workers involved in the build are other factors for the incentives.

#4 BTR trend: Better and more targeted proptech offerings

It’s not just Australia and the Pacific region influencing BTR in Australia. What happens globally also impacts our property developments. America’s Federal Reserve rate hikes and slow down on venture capital investment have had tech companies reviewing their strategies and looking for new opportunities. That’s great news for BTR developers as proptech companies will be far more willing to create solutions that work for their markets.

Building management and community management software play a crucial role in creating attractive and saleable BTR communities. They facilitate the lifestyle residents are looking for and willing to buy into. Finding the right software is usually easier said than done. That will change in 2024, making this our fourth BTR trend to watch.

We expect to see a strategic shift from proptech – more emphasis on product innovation for growing markets like Australia’s BTR sector and greater attention to what customers really want. Not everyone will be able to pivot as quickly as needed to the substantial growth expected for BTR developments. Even so, look out for better software solutions for enhancing efficiencies, streamlining rental payments and creating an enviable lifestyle for BTR residents.

#5 AI is influencing proptech development

AI exploded into our consciousness in 2023 and will permeate nearly every industry in 2024. Of course, the property and BTR sectors aren’t immune. AI can be used in so many different ways for property management. It can simplify operations and enhance efficiency, for a start. It can also provide insight for planning, provide a strategic approach to portfolios and help developers make use of big data to improve investment choices and enhance customer satisfaction.

AI is already assisting with many commercial property developments, so you can expect it to creep into residential solutions sooner rather than later. How residential property software solutions use AI will be a fun and interesting trend to watch this year.

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