9 October, 2023 / Category: Blog
Melbourne’s rental market continues to be characterised by high demand, low vacancy rates and rising rents. Pre-COVID, the average vacancy rate for a capital city was 3.1%. It is now 1%. Over the past year, rents in Melbourne have climbed 11.3%. To address this, there needs to be an increase in rental supply or a decrease in rental demand. With the population forecast to grow substantially, demand will likely get higher.
Anticipated trends for the rental market in 2024 include a deceleration in rent price growth, coinciding with a decrease in interest rates. This phenomenon is driven by declining interest rates, which, in turn, stimulate greater interest from real estate investors. Increased investment in rental properties contributes to expanding the rental housing pool, potentially alleviating the upward pressure on rent prices.
Furthermore, as income growth experiences a slowdown, households seeking rental properties may pivot towards apartments or shared housing arrangements as a more affordable alternative.
The Victorian Government recently announced its housing statement, including several rental market reforms to improve fairness and security for renters. These reforms include:
These changes create a favourable environment for institutional investments like build-to-rent in Melbourne’s rental market.
Build-to-Rent (BTR) is a real estate concept that involves purpose-built apartment towers designed to be owned by one entity and leased out to renters for the long term. While the BTR model is more common in the US and Europe, it has recently gained popularity in Australia as institutional investors see value in its long-term rental income and capital gains. BTR projects have sprung up nationwide, particularly in Melbourne and Sydney.
Read more about Build-to-Rent, including the benefits for renters here.
The introduction of several BTR projects in Melbourne over the next three years will significantly shift the rental landscape. These projects are expected to substantially increase the supply of available rental properties in the city. As more BTR properties become available, this increase in supply will help to place a check on rental price growth.
Many BTR buildings also offer state-of-the-art facilities such as gyms, spa and treatment spaces, co-working, or shared zones to relax in. These features entice and retain long-term tenants by enhancing the rental experience.
A recent report from JLL highlights the BTR landscape in Australia, indicating that while there are currently 4,340 BTR apartments in operation nationwide, there are an additional 8,914 BTR apartments under construction and 6,862 with development approval. The report suggests that as much as 59 per cent of the upcoming BTR apartment projects are in Victoria, particularly in Melbourne.
Build-to-Rent development is set to become the most significant asset class in new property development by 2030, surpassing offices, student accommodation and logistics.
Infolio boasts impressive Build-to-Rent and project leasing expertise, backed by a proven track record and extensive experience handling large-scale projects. Our team of highly skilled Senior Property Professionals have consistently delivered exceptional results.
Every property is unique, so our Project Leasing Team provides a personalised approach for every development. Infolio offers an end-to-end solution for your project, from small boutique developments to multi-level apartment towers.
Once renters move in, we will provide ongoing property management and community engagement, ensuring issues are resolved quickly, and renters’ satisfaction remains high.
Read more about our expertise here.
We’re thrilled to announce that we’re engaged in two exciting Build-to-Rent (BTR) projects: The Hobson Apartments and Highett Common. These exceptional developments will be introduced to the leasing market in the upcoming months, offering renters new and enticing housing options in Melbourne.
Infolio is leasing The Hobson Apartments in Spotswood’s Union Quarter development. We’ll be leasing 200 apartments and managing them on-site.
Union Quarter, located in Spotswood, features a bustling retail precinct with Woolworths, Dan Murphy’s, dining options, childcare, a gym, and a wellness centre.
The Hobson is 7km from the CBD, accessible by ferry, bike, train, car, or on foot. Spotswood and its neighbouring suburbs offer a vibrant lifestyle and easy access to Williamstown Beach, cafes, restaurants, and bars.
Infolio is the preferred property manager for Highett Common. With our local market expertise, we’re well-equipped to work with investors to optimise rental returns and enhance the value of their investment.
Highett Common offers a variety of well-appointed residences, including one-, two-, and three-bedroom apartments, as well as three- and four-bedroom multi-level townhouses designed to cater to diverse lifestyles.
As a purpose-built property firm, Infolio manages over 700 properties. Our vacancy rate is less than 1%, our tenants stay an average of 2 years, and our properties are leased 12 days faster than the market average.
At Infolio, our mission is to get you in, whether buying, selling, renting, investing or renovating. Contact us to discuss how we can ensure you have a successful property journey.