Australia’s build-to-rent (BTR) sector is fast becoming one of the industry’s most dynamic growth stories.
Once viewed as a niche product for inner-city renters, the model is gaining ground as a scalable, long-term housing solution.
“The first generation of projects largely served as a pilot phase for developers, investors, and consumers,” said Robert Papaleo, Colliers Head of Living Residential.
“Now that the concept has been proven, we’re seeing increased interest and deeper investment in products with broader market appeal.”
With the sector poised for expansion, Mr Papaleo shares his insights on how shifting demographics, housing affordability pressures and tenant needs will shape the next wave of BTR builds.
Affordability and Flexibility Fuel Growth
As home ownership becomes unattainable for more Australians, long-term renting is gaining ground - especially among younger cohorts seeking flexibility, convenience and quality.
“Many Australians are now choosing to rent apartments rather than buy homes, as this provides a more realistic set of outcomes,” he said.
“Renting is becoming not only a necessity but a deliberate choice across age groups, income levels and cultural backgrounds.”
BTR is well positioned to respond to this shift. Institutional ownership offers greater security, longer leases, high-quality maintenance and stronger tenant engagement.
“Unlike the private rental market, BTR tenants don’t face eviction simply because the owner decides to sell,” he said.
“These are long-term investments from institutional landlords who aim to create communities, not just buildings.”
The Rise of Suburban, Mid-Scale Projects
According to Mr Papaleo, the sector is entering a more diverse and decentralised phase.
What began as a premium product targeting inner-city professionals is expanding into suburban corridors, backed by strong rental demand and growing investor confidence.
“Successful models will continue to be replicated, however, we’re seeing growing interest in suburban mid-scale developments rather than just CBD-based tower projects,” he said.
“The next generation of BTR projects will be more varied, tailored to different locations, price points and tenant profiles.”
Developers are also adjusting their approach to balance affordability with amenity.
“There may be a shift towards slightly fewer amenities in some projects to target affordability, but the focus will remain on delivering flexible tenure, high maintenance standards, and strong operational support.”
Momentum Builds as Sector Matures
With several large-scale sales expected in 2025, Australia’s BTR sector is approaching a turning point.
“This year, we expect to see several market-defining transactions that will validate BTR as an asset class and attract more investment,” he said.
These upcoming deals, which will see some of the country’s earliest BTR projects change hands, are being closely watched by investors.
“The maturity of the sector will be marked by these first major asset sales, where initial BTR projects are sold to investors with different risk tolerances than the original investors that took on development risk to deliver the building,” he said.
“Observing how these trades perform and the returns they generate will be critical.”
As confidence in the asset class builds, so will the depth of capital and the scale of future developments.
“This is a necessary step in the evolution of the BTR market and there is strong confidence that the results of these transactions will unlock further investment and help expand the future supply pipeline,” he said.
