[+] BtR Proves Worth as Apartment Sector Change Agent

Build-to-rent and student accommodation asset owners could create step-change in apartment sustainability but it all comes down to data. It’s something that Hip V. Hype founder Liam Wallis is well across. Wallis and his family have been living by the numbers for the past 12 months as part of a live-in experiment. They were the guinea pigs in the year-long post-occupancy experiment dissecting the developer’s award-winning Ferrars &amp; York residential development’s building performance against sustainability goals. The 22 apartments in the all-electric building at South Melbourne were set up as embodied carbon neutral and operational carbon neutral, powered by 100 per cent green power. The numbers game The data reveals apartments in the six-storey residential building achieved an average 8.6 NatHERS rating (out of 10), while the highest rated apartment in the building achieved a 9.3 NatHERS rating. The self-funded 12-month research project has been driven by Hip V. Hype’s Better Buildings team, which specialises in green buildings and engineering. ▲ Achieving good air quality was no easy feat for a development between a train line and a major road through South Melbourne. Image: Tess Kelly The development was fitted with technology to monitor building performance as well as indoor air quality, carbon dioxide, humidity, temperature and volatile organic compounds, which are all key measures of Indoor Environment Quality (IEQ). “The industry in Australia typically has a poor understanding of how apartments perform when complete,” Wallis says. “Rating tools are not yet calibrated against performance in any meaningful way. It is in our DNA at Hip V. Hype to seek to improve design and performance outcomes with each successive project we undertake and to share learnings through our advisory and advocacy work to help raise the bar more broadly across industry.” Hip V. Hype’s head of better buildings, David Mahony, says the Ferrars &amp; York apartments had cut annual heating and cooling costs by 30 per cent, while reducing cooking-power costs 32 per cent, and water heating was down 21 per cent on average. Broader applications for BtR and PBSA Mahony says this is a cost saving of about $295 an apartment a year, which may seem like small change, but the ripple effect for high-density, long-hold assets is significant. For a 2500 apartment build-to-rent asset it could represent a $7-million saving over a 10-year period, he explains. ▲ HESTA and Super Housing Partnerships have now joined Assemble and Housing Choices Australia to develop high-sustainability build-to-rent apartments at Kensington. During the coldest fortnight of the year a three-bedroom apartment at Ferrars &amp; York maintained a temperature of 19C to 25C with very little reliance on additional heating, at just 32c a day. Mahony says the building’s high performance was down to the selection of building fabric and energy recovery ventilation (ERV) system. “Occupants are likely to be healthier and happier in buildings that have higher performing building envelopes and systems, such as energy-recovery ventilation that promote healthy internal environments like consistent temperatures, cleaner air and significantly better acoustic performance,” he says. Hip V. Hype founder Liam Wallis agrees. “Assets with better indoor environment quality can reasonably expect to see lower churn, lower vacancy and higher rental rates over time,” he says. The bottom line Building efficiency is key to operational expenditure management for long-hold assets such as build-to-rent and purpose built student accommodation. Wallis says there is “immense potential” for the research to feed into all housing typologies but particularly build-to-rent, where performance is closely linked to asset value. “For build-to-rent asset owners in particular, a building built to the standard of Ferrars &amp; York would likely result in a lower operational cost base for energy, lower vacancy and higher rates in what promises to be a competitive market for tenants with flexibility,” he says. “Other upsides, such as lower maintenance and system upgrade costs due to systems working less hard, are also worthy of consideration. “For those seeking to develop, own and operate an asset for more than 10 years, an integrated design-optimised approach to sustainability and greenhouse gas emission reduction is likely to result in a positive return on investment.” ▲ Hip V. Hype’s Liam Wallis acknowledges the initial outlay for strong sustainable outcomes is significant. Image: Tess Kelly Wallis acknowledges the upfront costs of an optimised approach to sustainable building design but says the proof is in the pudding, so to speak. He says capital expenditure may be higher but this is counterweighted with reduced operational maintenance and replacement costs and the “asset value can be higher as a result of outgoing cashflows being lower and incoming cashflows being higher in aggregate”. Hip V. Hype’s advisory services provide sustainable design advice to some of Melbourne’s biggest developers. Only 5pc exceed minimum standards Australian Housing and Urban Research Institute (AHURI) data shows that demand for sustainable apartments is not being met. While Australians are increasingly moving into apartment living, a spatial analysis of sustainable apartment development and major retrofit projects in metropolitan and regional NSW and Victoria shows less than 5 per cent of building projects are exceeding minimum standards for sustainability. And the ones that are achieving strong sustainability results are primarily concentrated in premium suburbs. The report says there is a disconnect in the speculative build-to-sell developments between what consumers want, and what is built. ▲ Gamuda Land has embedded strong green credentials in the design of its Canopy build-to-sell development at Fishermans Bend. While it may be a bottom-line decision for developers in a challenged feasibility environment, the build-to-rent sector has an opportunity to drive change. “Build-to-sell are often designed to only meet minimum standards, and the sector’s reliance on investor demand, which is especially vulnerable to economic cycles, works against developers delivering innovative, sustainable apartments,” the report says. But build-to-rent, community housing providers and student accommodation are less vulnerable to these market forces, explains UNSW City Futures Research Centre’s Dr Hazel Easthope. “During our research, a planning consultant suggested build-to-rent could become a major driver for sustainable apartments across all development models, as it could boost the scale of sustainable development and therefore could ‘push’ the whole apartment sector forward,” Easthope says. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] BtR Proves Worth as Apartment Sector Change Agent

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