Circa $300 billion worth of Australian residential assets could be owned by institutional investors within the next couple of decades if the multifamily sector evolves in the same vein as the US, according to a new CBRE thought leadership paper.
Multifamily, also known as build to rent, refers to multi-unit residential buildings owned by a single entity. The asset class is emerging in the UK and has been increasingly on the radar in Australia – with the potential to drive a fundamental shift in the funding mix for residential projects.
CBRE’s Head of Research for Australia, Stephen McNabb, said the multifamily sector represented approximately 15% of properties with five or more units in the US – a position obtained after 25 years of growth.
In total, the sector accounts for 20%-25% of the US$2 trillion in institutional property investment in the US – ranking it as the second largest investor allocation after office property.
“Factoring in that 35% of Australia’s population rent, if the market here evolved to the level of the US, up to 5% of the country’s dwelling stock by value could be institutionally owned in several decades,” Mr McNabb said.
“In today’s dollars, that represents circa AU$300 billion worth of residential assets or around 300,000 apartments.”
CBRE’s paper, the full version of which is due to be issued next month, highlights that the applicability of the build to rent sector will continue to progress in Australia as the market becomes increasingly comfortable with four key propositions.