BTR to outperform buy-and-hold this decade
Better Loan Solutions in Mornington Peninsula • Learning Centre • Insights
Better Loan Solutions in Mornington Peninsula • Learning Centre • Insights
The build-to-rent sector (BTR) is set to outperform traditional buy-and-hold commercial investments, according to asset manager DWS.
DWS said the strong rental growth we’ve seen over the past few years – on the back of a limited supply of rental property – could mean
demand for BTR housing will keep expanding for the foreseeable future.
“Combining our house view rental growth and yield forecasts over a 10-year time horizon from 2024, we believe that the residential sector
will be among the top performers, with high, unlevered property-level total returns expectations over the next few years,” DWS said.
DWS said there is still only a very small BTR presence in the residential sector. “The BTR housing model has, in recent years, gained
traction among institutional investors looking for first-mover opportunities,” they said. “The fundamental drivers for rental housing remain
intact.”
DWS said an issue in the current investment landscape is that standard buy-and-hold core strategies may not meet the steeper returns hurdle
that institutional investors are demanding. “Faced with higher financing costs and risk-free rates, we have seen investors turn towards to
value-added deals offering at least double-digit returns,” they said.
Across the Asia Pacific, DWS said high interest rates have been putting downward pressure on asset prices. “We expect the price correction trend to continue, with cap rates hitting a peak this year before easing in 2025 as monetary conditions ease,” they said.
Following the sharp increase in interest rates since 2022, traditional lenders have been under pressure to tighten lending conditions,
DWS said. They said that this also means there is now more room for alternative lenders to enter the debt markets.
In the Australian office market, DWS said vacancy rates remained high at between 12 to 14 per cent, although incentives appeared to be near a
peak. At the same time, prime logistics assets have benefited from a strong rental performance in Australia, where there is tight supply and
a lack of warehouse space.
Meanwhile, rising e-commerce trends remain intact, with occupier demand from third-party logistics providers and retailers supporting take-up and occupancy levels. DWS said for the retail sector, weak discretionary spending continued to weigh on leasing with incentives remaining at record-high levels.
Unlock significant long-term savings with our in-house mortgage broking service.
ALL DAY CONFERENCE @ Mornington Racecourse
6 May 2025 - 8:30am - 5:30pm
In today’s fast-changing world, staying competitive means embracing new trends and technologies. At B.I.T.E.
Conference 2025, you'll discover groundbreaking strategies and tools—like A.I. and robotic process automation—designed to
help you navigate and succeed in the evolving business landscape.
Aged care financial planning is a highly specialised area that requires not only financial expertise but also an understanding of the
emotional challenges families face. In this episode of The Accountant That Builds, host Shannon Smit sits down with Aged Care Financial
Advice specialists to unpack the complexities of aged care funding.
In today’s fast-paced world, productivity has become a paramount concern for professionals and business owners alike. We constantly strive to optimise our workflows, eliminate inefficiencies, and maximise the value we derive from every minute of our day. One of the key steps in achieving this is recognising the habits and tasks that drain our productivity and replacing them with more effective strategies.