Build-to-Rent moves from niche to necessity in Australia: analyst

The country’s rental supply gap strengthens the outlook for Build-to-Rent.

Australia’s Build-to-Rent (BTR) sector is moving from a niche investment class to an increasingly essential component of the country’s housing supply response, as chronic undersupply and shifting policy settings place further pressure on the private rental market, according to Cushman & Wakefield.

The consultancy said Australia continues to deliver significantly fewer homes than required to meet population growth and housing demand, contributing to sustained rental growth across major cities. Recent federal budget proposals may further complicate supply dynamics by potentially reducing investor participation in traditional residential housing and slowing the turnover of existing rental stock.

Conal Newland, International Director and Head of Living, APAC at Cushman & Wakefield, said the key challenge is now centred on scaling capital sources capable of delivering housing supply.

“The challenge today is not just population growth or rental demand. It is ensuring Australia has enough sources of institutional and private capital willing to fund new housing delivery at scale,” Newland said.

He added that Build-to-Rent becomes increasingly important if private rental supply becomes harder to deliver or less attractive for investors, particularly as institutional housing models gain momentum globally.

Cushman & Wakefield said Australia’s multifamily and BTR sector has evolved over the past decade from an emerging concept into a recognised asset class, attracting growing interest from domestic and international investors. Institutional capital is increasingly drawn to the sector due to stable rental income, demographic tailwinds and long-term housing demand fundamentals.

The consultancy noted that Japanese investors have been particularly active in Australia’s living sector, reflecting confidence in structural housing demand despite near-term market volatility.

Newland said investors are focusing on long-term fundamentals rather than short-term conditions, with continued capital allocation reflecting confidence in population growth, rental demand and the maturing nature of Australia’s living sector.

However, Cushman & Wakefield warned that challenges remain, including elevated construction costs, feasibility constraints and the need for stronger rental growth in some markets to support new development. Differences in planning systems and tax regimes across jurisdictions also continue to create complexity for investors.

Newland said improved planning certainty, faster approvals and greater policy consistency will be essential if the sector is to reach its full potential.

He added that Build-to-Rent is increasingly becoming a core component of global institutional portfolios, but stressed that it is not a standalone solution to Australia’s housing challenges.

“As Australia continues to confront housing affordability and supply challenges, Build-to-Rent will not be the sole answer. But it is rapidly becoming one of the most important pieces of the solution,” Newland said.