[+] Sydney Dangles BtR Carrot to Solve CBD Housing Crisis

The City of Sydney is going after build-to-rent and co-living projects, offering up to 75 per cent more floor space for new or existing towers—but it might not be enough to bring the developments into the eye-wateringly expensive CBD. Until now, developers have stuck to the outer city suburbs where the lower cost of land means projects are viable. The latest development put forward for the NSW build-to-rent market is a prime example: the Minor Hotel and Argentum Group have filed plans for a block at Rockdale, 15km south of the CBD. The eight-storey development with 50 apartments plus a rooftop entertainment area is planned for 15 The Seven Ways. The $20-million development in the Bayside Council area would be called Citiscape and operate under Minor Hotel’s property arm MINT Residential. ▲ A render of the proposed build-to-rent project at Rockdale. Sydney lord mayor Clover Moore says the build-to-rent model works to address the housing crisis in other cities and countries, and that more could be done in the NSW capital to encourage it. “In addition to increasing rental stock in Central Sydney, this type of accommodation has high-occupation rates,” Moore says. “That is great for inner-city vibrancy and avoids situations where international investors leave newly built flats empty for capital gain. “Build-to-rent housing does not sit idle with lights out, as some high-end investor apartments do, and these developments will help revitalise and boost the local economy.” The city put forward the proposed changes after reviewing the drop in demand for non-premium office space in Sydney after Covid. That vacancy rate is currently around 14 per cent. Under the changes, developers would be given between 20 per cent and 75 per cent more floor space for build-to-rent projects for both conversions and new builds, depending on the site location. This would apply to applications made within a five-year time frame from when the changes are formally approved. Developers will also be able to access 20 per cent more floor space for co-living accommodation to encourage co-living developments to stimulate an increase in student and low-income worker accommodation. “We know that students are one of the groups that have been hit hardest by the rental crisis in Sydney, with lack of appropriate accommodation and affordability both major issues,” Moore said. “By offering these additional floor space incentives we hope landowners and developers will create more co-living accommodation in areas such as Haymarket, which has proved popular with students in Sydney.” ▲ A render of Novus’ build-to-rent project in the Parramatta CBD. There will also be incentives for green roofs and a streamlined processes for design excellence and major development applications. However, developers will have to up the number of three-bedroom units within the development to at least 20 per cent. But the devil is in the detail, warns Novus Australia co-founder and chief development officer Jason Goldsworthy. “I suspect the proposal amendments will create scenarios where build-to-rent housing will become more competitive. “However, we are yet to test how competitive, particularly when you compare it to the traditional build-to-sell market. “My gut is telling me that it’ll still be extremely tough to get the economics to work. “But I am hopeful that it will open up some opportunities, and that is something that Novus will certainly turn their attention to in the early part of next year.” Novus is due to start its Parramatta build-to-rent project early next year and another in Chatswood in mid-2025. This adds to Novus’s Sturt at Southbank, Melbourne which, Goldworthy says, has been easier to navigate than its projects to the north. “I hope that there is some flexibility in what has been proposed [in Sydney] because you really need to let the market dictate the right outcome,” Goldsworthy says. “Mandating a minimum of 20 per cent of three beds is the perfect example of what not to do, in my opinion. “We hope that the City of Sydney focuses on qualitative objectives as opposed to rigid numerical compliance. “Delivering quality of product that is fit for the market is in the best interest of the develloper and operator of built-to-rent or else no one will live there.” ▲ A render of the Novus build-to-rent tower planned for Chatswood, designed by RotheLowman. Argentum Group managing director Nelson Silva says they have several projects focusing on build-to-rent and affordable housing under review. “It is increasingly difficult to deliver quality product in such superb locations in today’s market,” Silva says. “Through careful site selection, meticulous planning, and a strong relationship with the council, we were able to make this project work.” Minor Hotels Australia and New Zealand chief operating officer Craig Hooley says they believed it is the right time for them to enter the sector after operating 60 hotels. “We anticipate that Citiscape by MINT Residential will be the first of a wider portfolio of build-to-rent property assets managed by Minor Hotels; an area in which we have expertise and a desire to grow,” Hooley says. “Australia is observing a growing trend in the build-to-rent model in response to the shortfall of quality housing supply and growing increases in rent. “Driven by lifestyle and affordability reasons, there has been an increasing shift towards rental accommodation, with the traditional Australian mindset of renting being merely a stepping stone to home ownership, changing.” The City of Sydney’s proposed changes will next be presented to the NSW Department of Planning and Environment for gateway determination. 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[+] Sydney Dangles BtR Carrot to Solve CBD Housing Crisis

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