Land Lease Braces as Heavy-Hitter Investors Circle $12tn Living Sector

Australia’s property sector is sitting on a $12 trillion sleeping giant and global institutional investors are fast waking up to it. As part of a massive structural capital rotation, the big money is now circling underpenetrated territory—the nation’s living sector. And that has put one of the sector’s most compelling asset classes—land lease communities—squarely in its sights, with the lure of frictionless cash flows and high margins. “Despite all the news and noise, international capital is very interested in Australia,” CBRE head of Pacific research Sameer Chopra told The Urban Developer Land Lease Summit in Brisbane on June 25. “Their favourite market, favourite place to invest is the US, and Australia ranks second or third after that. “And retirement living, including land lease, is increasingly popular. “I think what’s been really interesting is that private equity has started to take quite a big interest in the sector… and that’s always a good sign, because they follow the cash flows, they do a lot of detailed modelling, and they’re now very active in this market.” ▲ CBRE head of Pacific research Sameer Chopra: Private equity has started to take quite a big interest in the sector… and that’s always a good sign. The living sector—encompassing land lease communities, student accommodation, build-to-rent and seniors living—accounts for a staggering 85 per cent of Australia’s $14 trillion total real estate value, he said. “Just to kind of put it in perspective… that is about five, six times bigger than the entire stock market in Australia. “Living is it—it’s the dominant component of real estate in Australia.” Yet, the sector remained largely untapped by major corporate players—with its under-institutionalisation representing an irrestibly long and lucrative commercial runway. “Only about 2 per cent of the living sector in Australia is currently commercially, institutionally owned and that’s where the upside is,” Chopra said. “That 2 per cent is going to get much bigger. It’ll get to 5, 10, 15, 25, 35, 50 per cent.” Contrasted against global markets—where his research indicated the living sector commanded almost half of all real estate investment in the US and about a third in Europe—the Asia-Pacific region languishes at under 10 per cent. ▲ A rendering of the Panorama community at Wilton, NSW: The living sector accounts for 85 per cent of Australia’s $14 trillion total real estate value. But with institutional capital being drawn into Australia’s living sector—in particular, the rise of its land lease communities asset class driven by the country’s asset-rich ageing demographic and collapsing residential supply pipeline—that gap would inevitably close. Land lease operators and investors in Australia were comfortably targeting “mid-teens” internal rates of return (IRR) with the addition of moderate leverage, Chopra said. “There’s only two sectors that do this… where revenue becomes profit very easily: land lease and self storage,” he said. “In most other sectors you have a massive amount of leakage.” He cited high property management fees in shopping centres, costly tenant incentives in office buildings, and the ongoing operational costs of tenant turnover in residential apartments. As well as avoiding such cash flow killers, land lease returns were further underpinned by “a massive supply-and-demand mismatch”. “There’s about 10,000 people per annum looking at land lease communities… [but] the supply typically runs at between 1500 to 2000 new dwelling a year,” Chopra said. Nationally, there are currently just over 40,000 land lease homes operating. However, the pipeline is rapidly accelerating, with 17,000 homes actively under construction and another 12,000 in the planning pipeline. The epicentre of this growth is coastal Queensland, which accounts for nearly half of the industry’s active stock and future pipeline. ▲ Urbis associate director Kylie Newcombe: the “silver renter” is rising as a major force within the broader living sector. The demographic wave driving the land lease demand was evolving rapidly, Urbis associate director Kylie Newcombe told the summit attendees, highlighting the emergence of the “silver renter” as a major force within the broader living sector. Driven by affordability challenges, relationship breakdowns, business collapses, and intentional lifestyle choices, the proportion of renters aged over 55 had seen steady growth over the past decade, the Urbis data showed. From 2016 to 2026, it estimates the cohort of silver renters has increased by 350,000 to more than 1.2 million. “We often hear this common narrative around the cashed up baby boomers or, at the other extreme, the older poorer Australian renter,” she said. “But we never really talk about what’s actually in between,” Newcombe said. “One-third are still working in some capacity and 10.6 per cent of these [over-55] renter households are earning over $104,000 as lone person households.” Meanwhile, Chopra’s research indicated Australia’s ageing population would see roughly 2.5 million to 3 million more people over the age of 65 added between now and 2040. ▲ A rendering of the $267-million GemLife New Gisborne in Victoria’s Macedon Ranges. It also showed 80 per cent of Australians own their homes outright—with the average home value sitting at $1 million. Demand for land lease product is being driven by an ageing, asset-rich cohort seeking less maintenance, more security and lifestyle benefits, without meaningfully compromising on space. “The older generation has got a lot of wealth… and that wealth provides the firepower for building premium land lease communities,” Chopra said. “So we can afford to get far more creative in what we bring to the market.” He said the broader seniors living real estate space—which includes land lease, retirement villages and aged care—was now “run rating” at $3 billion a year in trading volume. “We now account for between 5 and 10 per cent of all commercial real estate trading in Australia. It’s grown a lot… it used to be tiny amounts, tiny bits.” Not any more.

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Phil Bartsch
Sun 28 Jun 26

Land Lease Braces as Heavy-Hitter Investors Circle $12tn Living Sector

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