Capital Ideas: Can Canberra Crack the BtR Code?

Fresh research and on-the-ground developer insight suggest Canberra’s build-to-rent sector has the fundamentals to scale—if government can clear a handful of policy roadblocks. Canberra doesn’t usually top the list when capital goes looking for its next build-to-rent play. Smaller population, fewer sites of scale—on paper it’s an easy pass next to Melbourne, Sydney or Brisbane. But Charter Keck Cramer national executive director Richard Temlett says that mindset is underselling the opportunity in the nation’s capital. “The fundamentals are definitely there,” Temlett says, pointing to a mature rental market and a workforce that is white-collar, well-paid and government-employed. Temlett says it is a tenant profile similar to the fly-in, fly-out cohort that has made Perth’s build-to-rent sector work. There’s a wrinkle, though: not everyone who takes a Canberra government job actually lives in Canberra. Remote work has stretched the workforce into regional New South Wales, complicating the usual assumption that a government town equals guaranteed rental demand. Where the friction sits Temlett points to three structural issues holding capital back from looking seriously at Canberra. The first is the city’s rent-increase settings, where rental growth is tied to CPI at a rate of 1.1 times. Canberra build-to-rent pipeline ▲ Source: Charter Keck Cramer Developers are split on the impact. Some say the rule barely matters because tenant turnover in build-to-rent buildings is high enough that rents reset naturally each year. But others argue they want to retain tenants to avoid churn costs, and a rent cap makes that harder to justify financially. The second is leasehold title. Everything in the Australian Capital Territory sits on a 99-year lease rather than freehold, layered with a betterment-style variation charge triggered when a planning permit lifts a site’s value. For offshore capital used to freehold ownership opportunity in Australia, Temlett says it’s an added layer of complexity that pushes Canberra further down the priority list—even before the numbers are run. The third is scale. Institutional capital wants portfolios in the thousands of beds, not a single 200-apartment building. Canberra’s land is fragmented, and its planning scheme needs an overhaul to enable build-to-rent development to thrive, Temlett says. The government could consolidate and rezone sites specifically for build-to-rent at scale. The project already in the ground Two developments are already testing the model: Amalgamated Property Group’s project at Phillip, and Aware Super’s Dixon Village built above a Coles. Amalgamated proceeded as a first mover without the backing of major institutional capital and the 156-apartment building is leasing up. Dixon Village, bought from a local developer, is reportedly leasing well too, although both projects continue to navigate land tax treatment that Temlett flags as inconsistent and rent price points not in line with their coastal cousins. ▲ Amalgamated Property was an early mover in the build-to-rent market in Canberra with its Oaks Canopy development. The premium gap matters more than it might look on paper. Charter Keck Cramer’s broader research points to gross-to-net income ratios on build-to-rent projects running closer to 30 per cent—higher than initially forecast by the industry—squeezing the margin operators have to play with before a project stacks up for institutional capital. For the broader market, it signals that without an institutional backer prepared to accept a lower return, most developers are judging the risk isn’t worth it, yet. A policy fix, not a fundamentals problem Temlett is careful to frame this as a solvable problem rather than a structural dead-end. New South Wales, he argues, is currently setting the pace nationally—waiving foreign capital surcharges in its last budget and legislating more clearly around co-living, which gives capital the legal certainty to commit. Government appetite in the ACT appears to be shifting too. Temlett says the territory government is now actively seeking investment beyond the CBD and looking at ways to enable build-to-rent development. There’s also a possible subsidy lever. In Queensland, government top-up subsidies for key-worker housing within build-to-rent towers are helping projects stack up with government support, in return for a portion of subsidised rentals. A similar model in the ACT, Temlett suggests, could open the door for smaller, non-institutional capital and community housing providers to participate alongside the majors. The opportunity cost of waiting The stakes go beyond Canberra. Charter Keck Cramer’s broader national research—released this month—finds build-to-rent now sits firmly within Australia’s housing continuum, with major banks and superannuation funds increasingly comfortable underwriting it. ▲ Canberra’s Dickson Village—a mixed-use build-to-rent development—was the first completed asset to sell. The numbers back that up: there are now about 19,000 completed build-to-rent apartments across the country, and the newly launched MSCI Australia Build to Rent Property Index will give the sector the kind of benchmarked performance data that has historically been reserved for more established asset classes—another signal Temlett points to as evidence build-to-rent has outgrown its “alternative asset” tag. His view is that with the right planning, tax and incentive settings, the sector nationally could be two to three times its current size. For Canberra specifically, an extension of the light rail network is expected to open up a string of town centre sites across the ACT’s nine districts—several already earmarked for a mix of build-to-sell and build-to-rent close to retail precincts. Whether that translates into delivered stock, Temlett says, depends on whether the government sends developers and capital a clear enough signal on land, scale and planning certainty to make the numbers work.

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Taryn Paris
Mon 31 Aug 26

Capital Ideas: Can Canberra Crack the BtR Code?

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