Australia’s build-to-rent (BTR) sector is expanding rapidly, with the project pipeline now valued at more than $30 billion — up 35% in just 12 months, BDO reports.
Knight Frank also notes completions are scaling up, with 6,000 new BTR units expected in 2025, compared with 4,660 in 2024 and fewer than 2,000 per year on average over the past five years. Momentum looks strong for 2025, but concerns are already mounting about a thinner pipeline beyond that.
BDO partner Luke Mackintosh (pictured), who will speak at the Property Council’s Build to Rent in Focus event on Oct. 23, said the momentum reflects both market pressures and shifting investor priorities.
“We’re still in a rental housing crisis,” Mackintosh said.
Government reforms such as changes to managed investment trusts have helped, but the real shift has been in where capital is flowing.
“Melbourne has slowed dramatically because of the foreign purchaser duty, so we’re seeing more platforms moving north into Sydney and Brisbane,” he said.
Despite record delivery expected this year, Knight Frank warns the pipeline is thinning, with just 4,000 units forecast for 2026. Around 20,500 DA-approved units remain unfinanced and uncommenced, underscoring feasibility challenges.
“As well as an improvement in the macroeconomic environment, supportive government policy will also be vital for the long-term pipeline,” said Knight Frank’s John-Paul Stichbury.
Despite strong demand, projects are facing delays due to higher costs and skills shortages.
“The delays we’re seeing are largely about construction costs and labour shortages,” Mackintosh said. “That’s particularly acute in places like Brisbane and Perth, where pricing has made it difficult for many projects to commence.”
Mackintosh sees one of the biggest opportunities in building confidence among institutional investors, especially Australian super funds. He highlighted the Property Council’s partnership with MSCI to create the first BTR performance index.
“Residential property in Australia is an $11 trillion asset class, but only 0.2% is institutionally owned,” he said. “In the US it’s 12%, in the UK it’s 5%. With proper benchmarking, more domestic funds can start to treat BTR as a serious allocation.”
Policy clarity remains the sector’s biggest barrier. The Property Council has warned that Coalition moves to block federal BTR tax concessions could jeopardise 80,000 new rental homes – including 8,000 affordable dwellings – at a critical stage of the housing crisis. CEO Mike Zorbas labelled the move “wrecking ball policy,” noting that Australia is already 70,000 homes a year behind target.
Mackintosh said tax reform remains a critical barrier.
“BTR owners and investors don’t want special treatment – they just want to be treated the same as other institutional owned asset classes such as commercial, retail, PBSA and co-living,” he said.
“GST reform on BTR assets in addition to stamp duty and land tax surcharges for foreign institutional purchaser of residential properties are all cost imposts that don’t make a lot of sense in the middle of a housing crisis. If we level the playing field, capital will flow and thousands more homes will be delivered without the requirement of continued government subsidies.”
Knight Frank’s head of alternatives Tim Holtsbaum agreed, noting that policy and tax settings remain a key barrier to investment.
“The BTR tax environment in Australia is hard to navigate and a more uniform approach across states would be beneficial,” Holtsbaum said. “Tax on foreign investors remains problematic and decreasing this burden for institutional investors from abroad will help to increase Australia’s competitiveness.”
According to Mackintosh, a single BTR project adds on average 320 apartments into the rental pool — a scale that makes the model particularly powerful in easing shortages.
Looking ahead, he expects the sector to scale significantly if governments act to encourage both domestic and foreign capital.
From today’s $30bn, he projects BTR could grow to between $300bn and $600bn over the next 10 to 15 years, delivering 600,000 to 700,000 homes.
“That’s not just new housing,” Mackintosh said. “It’s also hundreds of thousands of new jobs in construction and operations, and the creation of a whole new institutional asset class in Australia.”
Despite pipeline risks, Holtsbaum noted that high occupancy and steady rental growth continue to underpin the sector, with more global entrants expected as the market matures.
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