Housing Minister Yvette Berry, Cedar Pacific Director of Development Alan Frost and Chief Minister Andrew Barr on the build-to-rent block in Turner. The government sees BTR as a key part of boosting Canberra’s housing supply. Photo: Ian Bushnell.
The $30 million sale of a prime block in Turner on Northbourne Avenue to investment firm Cedar Pacific to develop the ACT’s first genuine build-to-rent project is welcome news.
The company will deliver up to 300 units (15 per cent will be affordable at 75 per cent of market rent) in a campus-style development that will include a generous, for Canberra, amount of amenity including cinemas, a gym, a rooftop lounge and co-working spaces.
Apparently, overseas, where BTR is an established part of the housing sector, there is an amenity “arms race” to attract tenants.
But this development, on the light rail line and close to the city and the ANU, should not have any trouble getting takers.
As the first full BTR development in Canberra, it will set the scene and be a model for others.
There have been a number of BTR developments mooted in recent times, enticed by the ACT Government’s favourable tax settings, but developers have modified them to serviced apartments in an uncertain market.
This particular block was sold by tender as a dedicated BTR site, and there will be relief that an investor has jumped on board and hopefully inspire others to take up subsequent blocks, such as the one earmarked in the Gungahlin Town Centre.
Cedar Pacific, which also develops student accommodation and co-living projects, has crunched the numbers and seen reliable long-term returns for their investors.
Half of the inner north is renting, and Turner is at 54 per cent.
The Turner build-to-rent site is conveniently located on the light rail line, close to the city and ANU. Image: ACT Government.
The motivation for BTR is, of course, the housing crisis – increasingly prohibitive property prices and a shortage of homes to buy or rent.
If buying a home is out of the question for more and more people, then renting will need to be more reliable and fairer.
BTR projects do that and offer housing security with long-term tenancies. It is in the landlord’s interest to support and retain tenants, unlike the common situation in Canberra of having a property sold out from beneath you or being evicted because relatives need to move in.
They also generally deliver large numbers of dwellings, boosting supply and putting downward pressure on rents all around.
Apartment living isn’t for everyone, but in a city such as Canberra with a transient government and government-related workforce, BTR should work.
It should also help overcome the housing barrier that has been an ongoing recruitment challenge for the national capital.
But BTR investors do need the right settings from the government at all levels to be viable, and the ACT has worked to get the numbers right. Federally, there is more to do if BTR is to become as popular in Australia as the UK or US.
It is hoped that the Commonwealth can get proposed legislation for Managed Investment Trust tax changes right so BTR can blossom.
The ACT has endured vacancy squeezes and steepling rents in recent years, but an increase in supply, specifically apartments, has meant Canberra has not suffered the rental frenzy that other capitals are now experiencing.
However, rents are still high, and the vacancy rate remains too low.
BTR will make a difference, and it is hoped that the Turner project will be the first in a wave of well-placed developments.
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