BTR developments welcomed in housing sector

Build-to-rent developments have the potential to provide a new dimension to New Zealand’s housing stock, Colliers experts say.

A build-to-rent (BTR) property is defined as something that includes at least 20 dwellings within a single development, the dwellings are all held by a single owner, they’re rented under the Residential Tenancies Act 1986, tenants agree to minimum 10-year lease terms, and can personalise interior spaces. Tenants also have the option to terminate their lease with 56 days’ notice.

BTR is a sector of the property market that is advancing to maturity in many international markets such as the UK, with the Australian market being well on its way.

High house prices, a poor renting experience historically, growing populations, strong immigration, and white-collar employment numbers are prevalent components that have contributed to the demand for BTR properties, all factors which are commonplace in Auckland.

While there was a pronounced housing shortage in New Zealand in the 2010s, a post-Covid immigration boom will only contribute to that need for dwellings in the coming years.

Data from Stats NZ highlights there was an overall net migration gain of 111,100 people in the March 2024 year and inevitably these people will need a roof over their head.

Auckland’s strong job market and established migrant communities make it a popular location for new arrivals to Aotearoa.

Research from the Colliers Strategic Advisory team notes that in 2023 there were less than 1,500 total BTR units available in Auckland.

One of the first that came to market was The Nix in the central suburb of Grey Lynn that has 32 apartments and was completed in 2022 by Ockham Residential and sold to Resident Properties.

Since then, there has been a steady progression in the development pipeline punctuated by the recent opening of Kiwi Property Group’s Resido complex in Sylvia Park in Mount Wellington.

The 295-apartment development is spread across three towers and residents can choose from studio, or one, two, or three-bedroom apartments, to suit their lifestyle.

The development includes coworking facilities, a gym, and residents lounge, while all the amenities Syliva Park offers are easily reached via a quick walk.

William Silk, Associate for Strategic Advisory at Colliers, says their forecasting suggests the BTR stock in Auckland will nearly double during the next four years.

“We predict there could be just under 3,500 BTR apartments available in the city by 2027,” Silk says.

“Proposed and ongoing developments such as Gasometer BTR in Takapuna will include more than 350 apartments, while Simplicity Living are building in Morningside, Remuera, and Mount Wellington.

“Having more available apartments in the market will offer potential tenants more choice.”

A challenging rental market with high prices for traditional dwellings will also lead to people considering a BTR apartment, Silk says, while downsizers or retirees may be drawn to the flexibility on offer.

“Having the ability to have a pet in one of these developments will be attractive for people and overcomes one of the challenges presented in standard rental properties.

“With home ownership also being unattainable for people due to high house prices and interest rates, BTR serves as another option for them to explore.

“While the sector is only in its infancy in New Zealand there is major potential for growth with offshore investment funds likely keeping a close eye on future opportunities given the recent announcement from the Government that they have introduced the Overseas Investment (Build-to-rent and Similar Rental Developments) Amendment Bill to create pathways for overseas investors to invest in BTR developments.”

- Supplied by Colliers