Build to Rent in Australia.
As the latest trend in property asset classes, Australia’s uptake of build-to-rent, or BTR, is quickly gaining traction as a lucrative investment option over traditional build and sell models.
With a strong foothold in US and UK markets, local pilot projects such as Mirvac’s recently launched LIV Indigo project in Sydney Olympic Park are working to bolster industry confidence in the longevity of this new housing sector.
What’s the appeal? For starters, developers are not relying on apartment pre-sales for funding, providing project viability for banks and developers from the outset.
For future occupants, many BTR models offer desirable uplift in amenity, sustainability and flexible living, an attractive drawcard both for downsizers and long-term renters alike.
Future-proofing Build to Rent.
As BTR continues to grow as a solid investment and stimulus option in Australia, it is critical to bear in mind the needs and wants of future occupiers to ensure longevity and relevancy for generations to come.
Recent Government Policy change on land tax exemption has positively impacted the fundamental investment principles for BTR in NSW.
However, with site acquisition costs and short-term stagnation of population growth, along with the increase in affordable housing requirements, the underlying margins remain challenging.
With this in mind, Neuron's engineers have compiled their top five engineering design considerations that go hand-in-hand with the development of affordable, sustainable, desirable, future-focused housing products.
Engineering for community outcomes.
When we strip back the key opportunities and challenges of BTR, we discover that the underlying core value of successful BTR projects internationally, is community.
As stated in the City of Sydney Wellbeing Indicators 2019, societal wellbeing “intersects with the fields of social sustainability and urban resilience.”
Therefore, as engineers, architects, developers and investors, we are responsible for ensuring community stands as the single most important consideration, right from the design stage.
So how do we engineer buildings for healthy, resilient community outcomes to ensure the success of the BTR model at large?
The majority of residential buildings in Sydney have NBN and a reasonable communications backbone. For BTR models that strive for connectivity through smart building technology, NBN is simply not enough.
The solution? Improved technology enabling hassle-free living options for occupants, including ease of access, use and reliability.
Real-life examples include simplified digital rental agreements, interactive apps to support home and development automation and hassle-free maintenance booking.
Future residents will be looking for connectivity, but not always in a social sense. Connectivity can also mean the ability to manage rideshare and parking, kids party booking, pool availability and community events from a safe distance.
Such technology also provides revenue opportunities for investors through booking and rental of intermittent spaces, i.e. cinema rooms, communal BBQs, pool parties and functions, all while maintaining COVID safe environments.
The integration of physical communications infrastructure with utilities, security, amenity and community platforms requires smart building technology to be included in design and infrastructure plans from the outset.
Assessing options such as 5G DAS rooms and increased communication infrastructure are important factors during the early planning stages to make informed decisions.
2. Utility Cost & Maintenance Value
Utility cost and maintenance value is an often-overlooked aspect to any residential development. It is, however, crucial for attracting long term tenants to BTR schemes that may (at the outset) present as less affordable than the average apartment rental.
3. Environmentally Sustainable Design & Place-Making
Research strongly suggests that, on the whole, people care about their environmental impact. Green spaces make for happier people, happier families, and therefore happier communities.
Design excellence and quality of housing products are also factored in when tenants are selecting a place to live, particularly if it is for the long term.
How can a long term BTR asset create flexible futures that can embrace these elements, without impacting profit margins?
Signature design features that are integrated with sustainability measures will tick many boxes for design and sustainability-savvy tenants.
This could be as simple as providing rooftop gardens, a unique façade that assists with wind and light management, or thoughtful design that allows for a peaceful co-existence between tenants and local wildlife.
The key here is in the development’s local context, such as its Indigenous history, native flora and fauna, and other factors that are intrinsic and important to the local community.
Consider how features can contribute to the signature of the development, along with associated engineering impacts. This includes flexible irrigation and drainage systems for rooftop landscaped areas, and rainwater reuse to minimise pollutants through passive flow paths, and active filtration systems of water run-off to rivers and oceans.
4. Retail / Commercial Offering - mixed-use spaces
Like co-working spaces, offering F&B (food and beverage) in BTR schemes is a great idea.
Communal spaces and mixed-use retail/commercial developments are well balanced to provide additional revenue streams. However, managing F&B within your BTR scheme will require foresight at the design and planning stage.
Bear in mind that a single F&B will require a grease arrestor in the basement and a commercial kitchen exhaust shaft to the roof.
The more F&B outlets you have in your development, the more lost efficiency there will be up through the towers. For example, three takeaway retail outlets in a 20-storey building equate to 54.4sqm of overall lost space and $156,000.
To mitigate the loss of floor plate efficiency, profit margins and sustainability ratings through F&B offerings, consider options for cafés and sandwich bars that require lighter cooking and waste management.
Consider the impacts of PCA Grade, NABERs, Greenstar on system selection. Ideally, avoid needing to take services to the roof in order to maximise floor plate efficiency. Test various options, such as reverse cycle VRV with condensers located on lower podium levels, if possible.
5. Flexible Living/Working Spaces
Boundaries for living and home office integration are being pushed at a rapid rate, as flexible living and work is very much part of our ‘new normal.’
But what will, or can, this look like?
Research suggests that flexible construction will slowly decrease sole occupancy unit (SOU) delineation over time. For example, in the future, a two-bedroom apartment could be an office of four employees by day, and a liveable apartment by night.
What if studio apartments were to become part of office expansion strategies, presenting as a boardroom by day and a studio apartment at night?
Challenging flexible spaces for lighting, air-conditioning, fire safety, power outlets, and even wet areas will support affordability in an ever-changing and rapidly evolving world of flexible living.
If one thing is for certain, it’s that the future is uncertain. So how do we, as the development, construction and building design industry, get it right?
Put simply, we cannot rely on old methodology to drive impactful change.
Impacting the BTR sector now with technology that can test and drive innovation instantly will ensure outcomes are community-focused and the BTR sector continues to thrive.
In practice, we want to support BTR as it continues to mature in the Australian property market.
Neuron’s platform can test the impact of these critical decisions to ensure BTR remains an attractive drawcard for future occupants and, therefore, a viable asset class.