News release

Rental crisis response drives massive rise in BTR projects

JLL’s latest sector update shows an estimated 56 per cent rise in institutional-grade BTR projects in the pipeline in 2023

October 12, 2023

AUSTRALIA, 12 OCTOBER 2023 – Australia’s build-to-rent (BTR) projects have surged in 2023, with Victoria remaining the largest focus for BTR supply.

JLL’s Build-to-Rent (BTR) Residential Australia: September 2023 report found the number of apartments under construction nationally had increased by 65 per cent over the first 8 months of 2023, while the number of apartments with planning approval awaiting construction increased by 15 per cent and the number of known projects proposed at various stages of planning increased a massive 78 per cent.

The JLL report found Victoria remains the largest focus of BTR supply, with 59 per cent of the current BTR pipeline followed by 24 per cent in Queensland and 13 per cent in NSW

The number of apartments under construction and due in 2024 was expected to exceed 4,000 (which is roughly the number of currently operational BTR apartments) and more than 7,500 are in various stages of the planning and construction and due in 2025.

According to JLL Head of Residential Research – Australia, Leigh Warner said: “Low vacancies, rapidly rising rents and growing displacement of low-income earners has undoubtedly focused the attention of all levels of government nationally on addressing what has become a critically important social issue.

“Accordingly, in 2023 we’ve seen the introduction of a range of government incentives aimed at supporting the emerging BTR market.

“But while BTR is gaining momentum quickly following those changes, the BTR supply pipeline is not yet large enough to offset the fall in BTS [build-to-sell] construction and we still will not build anywhere near enough apartments over the next few years. Indeed, we expect if all BTR currently proposed over the next five years is delivered, it will still only equate to around 10% of historical apartment supply levels,” said Mr Warner.

JLL’s Head of Equity Advisory – Australia, Luke Prokuda, said while capital market conditions remained challenging for the vast majority of the commercial real estate sector, activity in the BTR and broader living sectors had been considerable, including the Lendlease and QuadReal joint venture partnership in Brisbane (advised by JLL), the fund-through partnership between Lendlease and Daiwa House for $650 million (advised by JLL) and the Student One transaction to Blackstone for $500m+ (advised by JLL).

“Investors now largely accept the macro investment case for BTR in Australia,” Mr Prokuda said. “As capital markets continue to stabilise and as investors become more familiar with underwriting what is still a relatively nascent sector, we expect investor demand will only increase.”

He expected both transactional and capital raising activity in the sector would accelerate in 2024 as developments started to complete and reach stabilisation, as investors continued to become more comfortable with underwriting investments and as the interest rate cycle reached its peak.

“Furthermore, we expect further clarity will emerge on the Federal Government’s decision to reduce the withholding tax rates for foreign investors in MITs, which will allow investors to factor this change into the underwriting considerations,” said Mr Prokuda.

Mr Warner said increased rents had also played a key role in helping to underpin BTR project feasibilities and attract more development and investment interest. He said operational BTR product was capitalising on strong market conditions with strong lease-up rates being achieved and, in some cases, large rental uplift.

“Long selling periods, particularly for larger BTS projects, are highly detrimental in a market where construction resources remain stretched and finance costs uncertain, which leaves developers very vulnerable to any rise in a project’s cost base,” Mr Warner said.

“Not only do BTR projects have the benefit of no selling period, but project revenues are rising in a market of strong rental growth and this is supporting project feasibilities.”

He said that, anecdotally, most projects had been leasing up quickly at anywhere between 25 to 40 apartments per month.

About JLL

For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with annual revenue of $20.8 billion and operations in over 80 countries around the world, our more than 106,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit