Rental as anything: Why more Australians are turning to professionally managed rentals

Renting property no longer carries the bad odour it once did in the Australian market, as the housing crisis bites and home ownership remains out of reach for many.

Instead, many more forms of rental accommodation are now becoming available. Colliers’ research has found that professionally managed rental living is expanding beyond inner cities, with more people choosing to rent as a lifestyle.

“We’re now seeing a combination of domestic and international funds investing in the living sector,” in areas like build-to-rent, co-living and land lease communities, says Robert Papaleo, head of living – residential at Colliers and one of the authors of the Australian Living Capital Markets Investment Review and Outlook report.

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“It’s an attractive sector for institutional investment given Australia’s robust market fundamentals and supply challenges. It’s globally proven as a significant asset class, and this is an easier way for them to gain exposure to all the fundamentals of the housing market and [achieve] a low-risk income from the growing pool of renters.”

As of December last year, there were 20,100 build-to-rent apartments completed and committed to, plus 8000 co-living units, and 100,000 land-lease community dwellings, the report says.

That’s still a small proportion of Australia’s $12 trillion residential asset class, with its total stock of 11.4 million homes, and 174,000 new dwellings planned by the end of 2025, but it’s growing fast.

While renting has simply become a financial necessity for more Australians, it is also a deliberate lifestyle choice for others who prefer to invest their capital elsewhere, Papaleo says. The more demand and supply in the sector, the more active and desirable it becomes.

Today, rental accommodation is edging up to a 35 per cent share of the total housing market, says Rasti Vaibhav, founder of strategic buying agency Get RARE Properties, offering even more potential for investors.

With 75,000 new properties a year needed to satisfy the rising demand from the growing population, especially new migrants, students and young people, it will continue to offer strong returns, whatever budget reforms come along.

“Renters’ attitudes have changed too, which is important,” Vaibhav says. “Before, many saw it as dead money but now more see it as a lifestyle choice, and they want to invest their money where it can work harder for them and rent to live closer to work or schools.

“I’m a long-time rentvestor, with a portfolio of rental properties, which has been my deliberate choice. But investors do need to change their mindset too to keep up with all the money now coming into the sector and the increasing competition.

“There’s now a huge need for family-friendly rental neighbourhoods and for long leases and more security of tenure and maintenance to be kept up.”

Brett Warren, national director of real estate advisory and buyer’s agency Metropole, says that while there’s so much new investment in the living sector, it does mean more competition for individual investors in the rental property market.

However, with demand so strong, and so many investors either sitting on their hands to see how the budget measures unfold, or selling, this is a good time to buy.

“There are incredible opportunities now for investors as, at the moment, they’re buying at a discount until the market comes back in three to six months,” Warren says.

“We have so many people doing nothing in the market, with 40 per cent just waiting to see, and 22 per cent more people selling than this time last year; the right time to buy for investors is now.”