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By Elizabeth Clarke and Niresha Mudalige.

The landscape of the Australian property market looks set to undergo a make-over in the coming decade, with continuing investment and development activity in the build-to-rent (BTR) sector. As with any emerging asset class, investment in the BTR sector presents developers and investors with both exciting opportunities and significant challenges. In this short article we highlight some recent developments in the Australian BTR sector and provide an overview of what players in the BTR market should be thinking about when considering undertaking a BTR project.

The Australian BTR sector has seen promising expansion in recent years. We expect this will only continue as demand for rental properties climbs in the wake of an enduring housing affordability problem.[1]

BTR boom

BTR projects are springing up all over the country. Much of the current development is occurring in Victoria. In 2022, Victoria accounted for 63% of the national BTR stock, owing to the completion of several major projects including Grocon’s Home apartments in Richmond and Southbank, Blackstone’s Realm project in Caulfield and Mirvac’s LIV Munro at Queen Victoria Markets.[2]

The sector has also seen notable growth in Queensland’s capital, Brisbane. Earlier this year Lendlease announced its partnership with Canadian real estate investment company, QuadReal Property Group, for the development of a 443-unit tower at Brisbane Showgrounds. This will be the first BTR project in Australia for both Lendlease and QuadReal.[3]

Another example of global investment in BTR is the Indi BTR platform which is led by global real estate investor Oxford Properties. Indi currently boasts a portfolio of three BTR developments in Footscray, Southbank and Sydney totalling over 1,300 individual units.[4]

More recently, Pellicano Group has announced that it will be teaming up with Australian architecture firm i2C to deliver a 166-unit BTR development in Oakleigh South, in Melbourne’s outer south-east suburbs.[5] These and other projects continue to add to the ever-growing pipeline of BTR capital in Australia.

What is behind Australia’s BTR boom?

BTR is still an emerging sector in Australia. But it is a well-established asset class in offshore markets such as the US and Europe.[6] However, as the above examples demonstrate, both local and international interest in the Australian BTR market is growing at an unprecedented rate.

One reason for this is likely to be that, despite global economic uncertainty and instability, the Australian property market continues to be seen as a low-risk market for foreign investment.[7]

BTR developments are still an emerging product in Australia. This represents an opportunity for early adopters to position themselves as leaders in the Australian BTR market and to take full advantage of the qualities which presently make BTR a rewarding investment.

What makes BTR an attractive investment?

BTR presents an opportunity for developers and investors to diversify their income streams. BTR projects also have the advantage of providing long-term sustained revenue, in contrast with traditional build-to-sell developments. However, these aren’t the only factors which make BTR an attractive investment. Other advantages and opportunities worth highlighting include:

  • Growing tenant demand: The combination of a shortfall in housing supply across Australia (especially in the east-coast capitals), increases in rent and a limited stock of good-quality rental properties is driving demand for high-quality long-term rental options. BTR offers high-quality accommodation in centralised locations and security of tenure through longer-term tenancies.[8] By positioning BTR as a suitable alternative to buying a house, developers can respond to and take advantage of this growing tenant demand.
  • Social and affordable housing: Developers and BTR operators can access various financial and planning incentives offered by governments, including land tax concessions, by partnering with community housing providers to offer social and affordable housing dwellings as part of their BTR projects.[9] The partnership between Assemble, Super Housing Partnerships, HESTA and Housing Choices Australia is a prime example of this kind of collaboration and innovation in the Australian property market.[10] Seeking to drive investment of this kind, the Queensland government, for example, announced discounts in land tax of up to 50% for BTR developments consisting of at least 10% affordable housing.[11]
  • Additional income generation: Where a BTR development forms part of a mixed-use building (which is most often the case) developers and investors may be able to generate income by leasing out retail or offices spaces, adding to the revenue already generated through rent for individual units.

Key considerations

While there are many advantages to investing in BTR, because developers who enter the BTR market now are operating in the early stages of the sector’s evolution in Australia, it is important to keep in mind certain regulatory and commercial considerations:

  • Location, location, location: Part of the attraction of BTR for tenants is that it is intended to offer high-quality accommodation in centralised locations, close to public transport and other conveniences. As such, the site of a BTR development is crucial to its success. However, with rising land prices and zoning restrictions in target areas, sufficiently sized sites in centralised locations can be difficult to find and secure. This has, in particular, affected the development of this sector in New South Wales to date.
  • Tax and duty implications: Certain tax and duty implications currently apply to BTR projects in Australia when compared with other commercial property investments.
  • Federal taxes:  While the Federal Government has recently proposed changes to MIT concessional rates and depreciation rates, it is yet to be seen whether GST differences will also be addressed, i.e. Developers are currently unable to claim GST credits on land and construction costs incurred to develop BTR projects, which are available for developers of build to sell properties.On 28 April 2023, the Federal Government proposed the following significant changes to BTR investments:
    • increasing the depreciation rate from 2.5% to 4% per year for eligible new build-to-rent projects where construction commences after 9 May 2023; and
    • reducing the withholding tax rate for eligible fund payments from managed investment trusts to foreign residents on income from newly constructed residential build-to-rent properties after 1 July 2024 from 30 to 15 per cent, subject to further consultation on eligibility criteria.
  • State taxes and duties: Foreign investors in BTR should also be mindful of potential additional taxes and duties in certain jurisdictions. For example, a foreign purchaser duty surcharge applies in all Australian states to the purchase of certain residential property, which may include BTR properties.[12] A foreign (absentee) owner land tax surcharge also currently applies in New South Wales, Queensland, Tasmania, Victoria and the ACT.[13] While certain concessions and exemptions are available, these typically are limited to certain eligible BTR developments.[14] Significant changes have been proposed in Queensland which are to apply from 1 July 2023 and which bring in an affordable housing component.  Where BTR developments in Queensland include at least 10% of their rental homes as affordable housing, the BTR development will receive:
    • a 50% discount on land tax payable for up 20 years;
    • exemption from the 2% foreign investor land tax surcharge for up to 20 years; and
    • exemption from being subject to Additional Foreign Acquirer Duty for the future transfer of the BTR site.[15]

Tax and duty concessions offered as part of this Queensland initiative are proposed to be contingent on the proponent continuing to demonstrate compliance with key eligibility criteria, including minimum affordable housing requirements.[16]

  • New to Market: BTR is not yet an established asset class in Australia. As such, many prospective renters may not even be aware that BTR is a possible option for them. Developers need to, therefore, invest in educating and effectively marketing to prospective tenants to ensure that they benefit from the growing tenant demand that exists.

Taking advantage of the BTR boom

While there are still some hurdles to clear, BTR holds many advantages and there is great potential for reward as a result of Australia’s favourable market conditions and increasing residential tenant demand.

HSF has assisted a number of the current players in the Australian BTR sector to structure, acquire and develop their BTR assets.


To join HSF clients in taking the lead in the BTR market and for more information, please contact:

[show_profile name='David' surname='Sinn' jobtitle='Partner' phone='+61 418 399 567']
















[1] Owen Wilson, ‘Housing shortage hits working Australians’ Herald Sun (online 9 March 2023).

[2] Michael Bleby, ‘BTR pipeline swells in a tight rental market’ Australian Financial Review (online 10 March 2023).

[3] Ibid; Nick Lenaghan, ‘Lendlease taps market for 5,000-unit ambition’ Australian Financial Review (online 9 March 2023).

[4] ‘Investa and Oxford commence construction on 1,000 Melbourne build to rent apartments across two projects’ Investa (Web Page) <,of%20approximately%20A%241.2bn.>.

[5] ‘Pellicano to complete $250M Oakleigh South retail precinct with BTR stage’ Australian PropertyMarkets.News (Web Page) <>.

[6] Nick Lenaghan, ‘Lendlease taps market for 5,000-unit ambition’ Australian Financial Review (online 9 March 2023).

[7] Scott Mackenzie, ‘Investment future bright amid global uncertainty’ Australian (online 16 March 2023).

[8] Practical Law, ‘Build to rent (BTR): overview’ (

[9] Practical Law, ‘Build to rent (BTR): overview’ (

[10] ‘Launching Super Housing Partnerships’ Assemble (Web Page) <>.

[11] ‘Tax concessions to drive investment into affordable housing’ Queensland Government (Media Statement) <>.

[12] Practical Law, ‘Build to rent (BTR): key investment considerations’ (

[13] Practical Law, ‘Build to rent (BTR): key investment considerations’ (

[14] Owen Wilson, ‘Housing shortage hits working Australians’ Herald Sun (online 9 March 2023).

[15] ‘Tax concessions to drive investment into affordable housing’ Queensland Government (Media Statement) <>.

[16] ‘Build to Rent: A proposal to deliver more affordable housing for Queenslanders’ Queensland Treasury (Discussion Paper) <>.

Niresha Mudalige photo

Niresha Mudalige

Partner, Melbourne

Niresha Mudalige
Julie Jankowski photo

Julie Jankowski


Julie Jankowski
Lucy McCullagh photo

Lucy McCullagh

Partner, Head of Finance, Melbourne, Melbourne

Lucy McCullagh

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Niresha Mudalige photo

Niresha Mudalige

Partner, Melbourne

Niresha Mudalige
Julie Jankowski photo

Julie Jankowski


Julie Jankowski
Lucy McCullagh photo

Lucy McCullagh

Partner, Head of Finance, Melbourne, Melbourne

Lucy McCullagh
Niresha Mudalige Julie Jankowski Lucy McCullagh