Student accommodation giant turns attention to build-to-rent
Student accommodation manager UniLodge is looking towards Australia’s growing build-to-rent space to further diversify its portfolio.
UniLodge recently launched Essence Communities, a specialised build-to-rent property management arm to cater for developers and investors looking to move into the emerging asset class.
Poor housing affordability has driven the success of build-to-rent in the US and Britain, offering tenants long-term leases and greater housing security. After a rocky start in Australia due to restrictive tax laws minimising returns, the sector has started to recover with the assistance of subsidies from federal government funds and legislative changes.
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Executive chairman of UniLodge, Peter Bates, hopes that as an early adopter within the sector, the company can leverage its 23 years of experience in the Australian rental management space.
“I think it’s inevitable that the build-to-rent sector is going to grow in Australia. Build to sell has been the focus for too long, and affordability is getting out of control. Also, a lot of the younger people are just not interested in buying, so there will be lifelong renters,” Mr Bates told The Australian.
“From a business strategy perspective, we see it’s a natural fit for us. Diversification is always good in case the sector is cyclical. It’s more about seizing an opportunity and getting first mover advantage in what is an early-start sector in Australia that has a significant precedent overseas.”
Urbis director Mark Dawson said the build-to rent sector has grown substantially through 2018, with more than $1 billion worth of projects in the pipeline around the country. If Australia follows the same trajectory as Britain, the eastern seaboard may see as many as 100,000 build-to-rent apartments in the next decade.
UniLodge presently operates more than 70 student accommodation and serviced apartment facilities throughout Australia, which includes the management of 222,000 beds. Bates says Essence Communities is a natural extension of the UniLodge brand, given purpose-built student accommodation operates in a similar way.
“We’ve seen how essential security and high-quality community offerings are to creating environments that occupants call home. Our understanding of unique community requirements are key elements of our success and will translate to thriving build-to-rent projects,” Bates says.
“Our platform is the biggest in the country (in the student accommodation sector). Therefore, we could offer synergies and efficiencies to people wanting to get into the space, wanting a piece of the property investment but don’t necessarily want to build a management platform to make access the sector.”
The latest move will extend upon the Essence brand to complement medical-focused subsidiary, Essence Apartments and Suites.
This article originally appeared on www.theaustralian.com.au/property.
