One of the country's biggest providers of student accommodation, UniLodge, is expanding into the emerging build-to-rent sector.
UniLodge's build-to-rent property management arm, Essence Communities, will now attempt to break into Australia's emerging asset class leveraging its 20 years of experience in the management of institutionally and independently owned assets.
The concept known as build-to-rent has taken off in expensive cities in the UK, US, Japan and parts of Europe because it offers a more secure rental experience.
In the UK alone, the build-to-rent sector has led to 68,000 units built or under construction since 2012.
Until now the asset class has struggled to launch in Australia due to the lack of returns from residential rents compared with commercial property, or developing property to sell.
Changes to tax laws and potential new subsidies for affordable housing projects within the build-to-rent space could be on the horizon, especially for those who are superannuation and offshore pension funds, but for others, experience and specialist delivery will be the main drivers for entrance into the sector.
UniLodge chairman Peter Bates told The Urban Developer many Australians were continuing to find it increasingly difficult to purchase property and many were seeking high-quality community offerings and the security that comes with longer lease terms.
“For many years the build-to-rent sector has been a cornerstone of the property market in the US, and more recently the UK, capturing tenants across all income levels,” Bates said.
“Given our experience in providing world-class student accommodation, which is essentially a build-to-rent product for a specific student market, diversifying our business to service the build-to-rent sector was a natural fit.”
Essence Communities, conceived by student accomodation sector heavyweight UniLodge a little over 12 months ago, will draw on the lessons learned from a portfolio of more than 70 student accommodation and serviced apartments across Australia.
“We’re confident that our community-focused approach will set the Australian build-to-rent market apart as the sector begins to take hold,” Bates said.
“Our market-leading technology, bespoke services and understanding of unique community requirements, are key elements of our success and will translate to thriving build-to-rent projects through Essence Communities.”
The build-to-rent development model, involving a long-term owner commissioning an entire building, could create an incentive for higher, more enduring quality than the standard “build-to-sell” apartment development approach, a new departure from typical Australian real estate.
“We expect the build-to-rent segment will have greatest impact in high-demand, inner-city areas where home ownership is becoming more difficult, and residents are seeking greater choice and long-term security in rental accommodation,” Bates said.
“Essence Communities by heritage has a national footprint across Australia and New Zealand and we have the infrastructure and capabilities to support development projects in any major city across Australia.”
UniLodge is majority owned by Luxembourg-based private equity firm Pamoja Capital, founded by Canadian billionaire John MacBain with a minority stake held by UniLodge executive chairman Peter Bates.
Founded by Jane Hewitt in 1996, UniLodge manages a portfolio of more than 16,000 beds.
UniLodge's move into the build-to-rent sector follows its announcement earlier in the year to brand into healthcare accommodation under its Essence brand.