Cities: Mixed-Use

Is Build-to-Rent poised to come of age?

Posted on by Quantify

Significant demographic headwinds over the next decade will reduce the pool of ‘mum and dad’ investors able to drive new rental supply, which in turn will pave the way for a greater presence of Build-to-Rent (BTR) product in the market to fill the void:

  • The segments of the population with the highest rates of investment property ownership (45-54 year old and 55-64 year olds) will have the lowest rate of population growth.
  • At the same time, the age cohort with the fastest rate of population growth (75+ year olds), will decrease their rate of ownership as they divest investment property to help fund their retirement.
  • Meanwhile, the fast-growing Millennial cohort (35-44 years old over the next decade) is likely to find it more difficult to purchase an investment property than previous generations as they deal with their own affordability challenges as owner occupiers.

While the stars are aligning for BTR, it should be noted that broader market rents will need to increase significantly further for BTR to move beyond the premium-priced end of the market and to financially justify the development of a mainstream product.

For help with where your project fits and how you can capitalise on the changing market, please do not hesitate to contact Quantify Strategic Insights’ principals: Rob Burgess at rob.burgess@quantifysi.com.au or Angie Zigomanis at angie.zigomanis@quantifysi.com.au

Remote working for Sydney CBD workers on the rise

Posted on by Quantify

Following our analysis of Melbourne CBD workers last week, the chart below highlights the change in the number of Sydney CBD workers reporting their place of usual residence being outside of the Greater Sydney area. The number of Sydney CBD workers reporting their place of usual residence as outside of Greater Sydney increased by a greater magnitude than seen in Melbourne over 2016 to 2021, rising by 110% from 8,250 in 2016 to 17,250 in 2021. Much of the increase will have been a response to the lockdowns through the COVID pandemic creating a desire for more space, and aided by the ability for many to be able to work remotely. The figure represents 5.1% of the total number of Sydney CBD workers.

As would be expected, the largest increases were experienced in the Hunter and Illawarra regions (as well as the Central Coast, which is within Greater Sydney). These locations are still close enough to commute from on an infrequent basis, while offering significant amenity, affordability benefits and lifestyle attributes.

There were also notable increases in more distant regions, such as the Northern Rivers coast and South Coast, as well as the major coastal centres of Port Macquarie and Coffs Harbour. Inland, Orange experienced a notable increase in Sydney CBD workers.

Notably, the aggregate increase in Sydney CBD workers in regional New South Wales (+3,000) was outnumbered by the rise in those living interstate, which increased from 2,834 in 2016 to 8,913 in 2021 (+6,079). Interestingly, despite the harsher lockdowns in Victoria through the COVID pandemic, Victoria surpassed Queensland over 2016-2021 as the state with the most Sydney CBD workers.

Regional centres will have benefited from the migration of these remote workers, who are likely to be on higher incomes than the existing population and supporting local businesses. On the flipside, downsides have also emerged in the form of reduced availability of rental stock, with significant increases in rents and values reducing affordability for locals. Further analysis of this demographic will assist in providing more insight into ways to manage the emerging stresses.